It is obvious that a substantial number of international Forex brokers due not accept US traders. A good number of international Forex brokers operating offshore do not accept US residents to open account with them. Majority of them are usually the regulated brokers. It will become very clear as we explain why this happens. Doing business with US citizens in this case is barred by strict regulations. Mostly, these are regulations imposed by US government. Fortunately, these regulations do not completely stop international brokers from accepting us citizens. There are a good number of offshore international Forex brokers that accept US citizens. Below is the primary reason why some offshore international Forex brokers do not accept US citizens.
The Dodd-Frank Act is the recent federal statute signed by president Obama. The first time it become operational was on July 21, 2010. It is a purely financial regulatory reform agenda. The act in itself has implemented new rules to be applied for regulating financial markets such as stocks, futures, options, futures and Forex.
Dodd-Frank Act requires that every Forex brokerage company who wants to do business with US citizens must first be registered with both Commodity Futures Trading Commission (CFTC) and National Futures Association (NFA). Many international Forex brokers find this very difficult for them. Obviously, as at to date there are a good number of Forex brokerage companies are not registered with neither of the regulatory body. This number is constituted by legal and regulated brokers. Such brokers simply stop accepting US citizens so as to avoid the paper mess. Rather than incur the unforeseen expenses, it is easier and wiser for them to decline US citizens.
The primary reason that has forced international offshore Forex brokers to decline US citizens is the implementation of Dodd-Frank Act. US government has also provided a number of reforms and changes targeting the financial markets that bar their citizens from doing business with international brokerage companies. Several of these regulations have direct link to CFTC activities. The US government have directly implemented some of them. Besides this, the Dodd-Frank Act has many other disadvantages. Due to this regulation, many foreign banks not able to continue accept US clients. Secondly, offshore international Forex brokers have made several changes such as minimum account trading, spread levels, leverage, and for US citizens.
The Way Out
Although the Dodd-Frank Act has imposed strict restrictions, there are substantial numbers of offshore international Forex brokers that accept US traders. If you are a US citizen, there are chances you can open account with such international brokers not registered by US regulatory bodies – NFA and CFTC. This is only possible under certain conditions. Such offshore brokers are only allowed to accept US clients only under their US -based affiliate brokerage firms.
This regulation requiring offshore Forex brokerage companies to register with Commodity Futures Trading Commission (CFTC) and National Futures Association (NFA) for them to accept US trader has both its advantages and disadvantages. The fundamental advantage of this regulation is the guaranteed safety of the US citizens’ funds. This is what it intended to do. It is also expected to enrich the US State Treasury since the funds invested won’t be taken out of the USA borders.
Unfortunately, there are substantial disadvantage of this both to us citizens and government. First, the services of international brokers cannot be enjoyed by US citizens if such brokers are not regulated by US government. Secondly, for brokerage companies accepting us citizens, they have raised the minimum capital. As a result of this regulation, US citizens are now subjected to unfavourable trading conditions; low spread and reduced leverage.
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