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Q: FOREX trading company based in Belize doesn't accept U.S. clients ( Answered 5 out of 5 stars,   2 Comments )
Subject: FOREX trading company based in Belize doesn't accept U.S. clients
Category: Business and Money > Finance
Asked by: fleasting-ga
List Price: $15.00
Posted: 21 Jan 2004 17:13 PST
Expires: 20 Feb 2004 17:13 PST
Question ID: 298947
Could someone please explain why the company GCI Financial Ltd doesn't
allow U.S. citizens as its clients? (see bottom of their homepage Are their practices illegal here? And is
there any way to get around this if this is merely a formality?

Clarification of Question by fleasting-ga on 22 Jan 2004 09:45 PST
I have done some research and I am more clear as to exactly what I
want to find out. My new questions are:
Why is trading Contracts for Difference illegal for all U.S.citizens?
Is this a long standing law, or has it been implemented recently? 
How strictly is this policy enforced by the online brokers such as GCI
Financial, the SEC, and other agencies?

Request for Question Clarification by techtor-ga on 22 Jan 2004 11:24 PST
Hello Fleasting,
Have you inquired from the company itself about this policy?

Clarification of Question by fleasting-ga on 22 Jan 2004 11:54 PST
Yes, I inquired with the company (probably level I customer service)
and all I got was a restatement of the policy with absolutely no
explanation. I am really looking to get information on this issue from
a non-biased 3rd party.

Request for Question Clarification by omnivorous-ga on 22 Jan 2004 12:27 PST
Fleasting --

This only slightly better than speculation, but Robert Preston,
writing in the Journal of Accountancy, stresses the extent to which
the IRS tries to control offshore investing.  The following article is
about IRAs and restrictions on foreign investing but may lend a clue:
"The Do's and Don'ts of IRA Investing" (Preston, April, 2000)

Joint Belize-U.S. agreements may well put onerous reporting
requirements on exchange traders of American citizenship in Belize.

Best regards,

Subject: Re: FOREX trading company based in Belize doesn't accept U.S. clients
Answered By: hlabadie-ga on 22 Jan 2004 16:02 PST
Rated:5 out of 5 stars
Trading in foreign currency exchange futures, a commodity, is not
illegal for U.S. citizens. It is, however, a regulated market, like
other commodities markets. In order to trade in commodities futures,
including foreign currencies futures, the broker must be registered in
the United States with the National Futures Association. The reason
that GCI Financial cannot trade in the U.S. is that it is not so
registered. There are registered currency futures brokers that can do
business with GCI indirectly, but a resident of the U.S. must trade
with the registered broker.

Registered brokers can be located through the National Futures
Association. That GCI is not registered can be verified by using the
search functions here:

National Futures Association

The United States Commodity Futures Trading Commission (CFTC) is
charged with regulated futures trading. It has issued a number of
warnings and advisories regarding foreign currency futures trading

The United States Commodity Futures Trading Commission (CFTC)


"A new federal law, the Commodity Futures Modernization Act of 2000,
makes clear that the CFTC has the jurisdiction and authority to
investigate and take legal action to close down a wide assortment of
unregulated firms offering or selling foreign currency futures and
options contracts to the general public. In addition, the CFTC has
jurisdiction to investigate and prosecute foreign currency fraud
occurring in its registered firms and their affiliates.
"Generally speaking, foreign currency futures and options contracts
may be traded legally on an exchange or board of trade that has been
approved by the CFTC.

Even where currency trading does *not* occur on a Commission-approved
exchange or board of trade, the trading can be conducted legally
where, generally speaking, one or both parties to the trading is (or
is a regulated affiliate of) a bank, insurance company, registered
securities broker-dealer, futures commission merchant or other
financial institution, or is an individual or entity with a high net

Where forex firms do not fall into the categories of regulated
entities outlined above and engage in foreign currency futures and
options transactions with or for retail customers who do not have high
net worths, the CFTC has jurisdiction over those firms and their
"Contact the National Futures Association to see whether the company
is registered with the CFTC or is a members of the National Futures
Association (NFA)?. You can do this easily by calling the NFA
(800-621-3570 or 800-676-4NFA) or by checking the NFA's registration
and membership information on its website at
"The Commodity Futures Modernization Act is available in our Law and
Regulation <>"


"The Commodity Exchange Act (the Act) was recently amended to make
clear that it is unlawful to offer foreign currency futures and option
contracts to retail customers unless the offeror is a regulated
financial entity as enumerated in the Act, including futures
commission merchants (FCM) and their affiliates. Off-exchange trading
of foreign currency futures or options with retail customers by
counterparties that are not within one of the enumerated categories is
a violation of Section 4(a) of the Act."



fleasting-ga rated this answer:5 out of 5 stars
Good research, timely, answers my question. Thank you

Subject: Re: FOREX trading company based in Belize doesn't accept U.S. clients
From: hlabadie-ga on 22 Jan 2004 18:08 PST
Thanks for the rating.

Subject: Re: FOREX trading company based in Belize doesn't accept U.S. clients
From: ttdanny-ga on 11 Feb 2004 19:54 PST
Even companies licensed in their own (foreign) country (for example
see do not accept US citizens/residents to
avoid problems with the SEC.

US citizens/residents are not allowed to trade CFDs, just like it took
a very long time for the US regulators to accept single stock futures.
Can it be they view these derivatives as a threat to the US stock

Most US investors that go "offshore" set up an offshore structure (a
company, trust or foundation) in a country like Panama, Belize, Nevis,
... This way they de-US the account holder and opening an account is
no longer a problem. A lot of investors also use this to avoid US
taxes, but you should be very carefull if you intend to do so.

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