Expatriates and United States Residents

Q. Is spread betting regulated in the USA? What is the FSA equivalent in the States?


A: No financial spread betting is allowed on USA soil or offering towards USA residents unfortunately. You might want to check out Nadex.com though which offers binaries for people residing in the states. As for regulation the USA has the Securities Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). There is also FINRA which is the actual regulator for general securities business.

Q. I'm a UK expatriate living in Spain. As an expat can I still use spread betting as a tax-advantaged trading vehicle?

A: There's no problem in opening an account from Spain but the tax rules are pretty murky for those outside the UK. The first point is that spreadbetting doesn't exist in Spain and therefore you have to assume that it will be taxed like something that does. The question is 'what'? If it's gambling then I think that would be taxed like income i.e. up to 45%. Better hope that instead it's treated like futures and thus subject to capital gains rules. If the position is held for less than a year the gain would again be taxed like income. If the position is held for more than a year then the rate (from Jan 2007) is 18%.

So suppose you were trading currencies long term and rolling your positions every 3 months. If they were futures then the rolling would not be counted as a disposal and therefore you could take out your profits immediately, but leave the position open and delay the taxable event until you finally close it - that could be years. Better check with your local authorities as to what taxes will apply to you.

Q. I'm located in the United States where Uncle Sam taxes everything and outlaws anything which it can't tax (like online gambling!). Is there a way for me to open a spread betting or CFD trading account?

A: I believe that most reputable companies won't deal CFDs with US residents - although some dodgy ones might (note - NorthFinance is located in Cyprus and not regulated by any authority so use it at your own risk...) -:

Welcome to our live chat service!
NorthFinance Support: Hello. How may I assist you?
NorthFinance Support Team: Hello my name is Gavin , how may i help you?
you: I live in the USA can I trade CFD's with NF?
NorthFinance Support Team: yes you can
you: Are you sure?
NorthFinance Support Team: i will give you the link of our CFDs
NorthFinance Support Team: http://www.northfinance.com/eng/cfd/forex-cfd-specifications/
you: Some people (Madrid9) says we can't
NorthFinance Support Team: you can
you: Thanks!
NorthFinance Support Team: we have many clients from the USA
NorthFinance Support Team: you're welcome

And some others will allow trades from an offshore company owned by a US resident. For instance IG Markets states in its information pages:

United States customers -:

Under existing US legislation, we are unable to enter into margin trading transactions with US residents.

US Customers are defined as:

  • any natural person resident in the US (other than on a short term basis); or
  • a corporation or partnership incorporated or organised in the US, but excluding an offshore branch or agency of a US person that operates for valid business reasons and is engaged and regulated as an insurance company or bank; or
  • a branch or agency of a foreign entity located in the US; or
  • a trust of which the trustee is a US person, unless a non-US person has or shares investment discretion; or
  • an estate of which a US person is the executor or administrator, unless the estate is governed by foreign law and a non-US person has or shares investment discretion; or
  • any account held for the benefit of a US person.

 Spread Bets in SIPPs / Why do Big Banks Bank Employees from Spread Betting?

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