UK or USA based broker?

I would like to open a forex/cfds account and I hesitate between a USA and UK based brokerage. What would be your advice and opinion and why?

I would appreciate your replies.

What is the tax implication from Bahrain?

brendansvest said:

What is the tax implication from Bahrain?

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I am currently working in the UK. But my question is not only about taxes but also on quality and regulation of the brokers. Is there a tendency to favour a UK broker over a US one or visa versa?

For instance I would not ask that question if I had to choose between a US broker and an Indian or Russian one because I would just immediately assume that the US broker is of a better quality and better regulated than the Indian and the Russian ones. Of course this is just an assumption and it is not my aim to offend India and Russia.

The major difference between US and UK based brokers comes from the new NFA (National Futures Association) regulations that have been introduced this year. Those new regulations limit US brokers to use only the FIFO (first in, first out) method for the accounting of their clients, thus making hedging not possible. Most of the US based brokers provided hedging type of orders, so that when the new rule was first introduced, it caused great difficulties for those companies. The complications did not come only because most clients had got used to trading with hedge orders, but also because the trading software was made to operate this way. The situation made all those companies to either move to other countries, mostly in the UK, or create subsidiaries there. At the present moment there are not that many brokers left in the US and most of them also have subsidiaries in the UK, so in this sense you have the same brokers in both countries. The difference is that in UK there are many others as well and all companies based in the UK can have hedging type of orders. Moreover, the FSA has always been known for providing good regulation basis for trading with financial instruments. It also has fully implemented the MiFID directive, which is the basis for regulations in the European Union.

If you want to trade both CFDs and FX, it can only be the UK as CFDs aren't offered in the US. Also bear in mind that US OTC FX brokers are not allowed to segregate client funds, so your money should be safer in the UK.

Great answers. Thank you very much!

To BUGGYFX:

How is life in Bulgaria? My wife is Bulgarian and we always have agreat time when in Sofia. Are you Bulgarian or an expat?

Hi soniabvc,I am glad I can be of help.
I am from bulgaria. Live here is ok, you know depending on the money you have And sofia is really a nice city, I like it too.

Excellent. It is the first time I come across a Bulgarian with this level of english.

Thanks for the compliment soniabvc

My greatest memory of Sofia when I visited was sitting in the KFC there and thinking, "I don't think this chicken is really chicken at all."

Actually the mountains are pretty nice, went skiing a few times in Borovets and Bansko but gave up a few years back when the snow was too patchy and unpredictable. Shame because I resent having to pay the inflated prices in Switzerland.

Definitely no US based, the NFA regulations are being harder and harder, the independent trader is gonna disappear for the US brokers, they don’t even allow scalping. My broker is a swiss broker, about to become a swiss bank.

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Very nice! I got a very good idea on choosing between UK or USA based broker...Thanks for that..