Is cTrader Available for Forex Traders in the United States?
Are you looking to use cTrader in the United States? Unfortunately, many traders in the United States are asking the same question in online forex trading forums and across cTrader’s social network pages. They want to know about the availability of the cTrader platform to citizens and residents of the United States. The sad answer which is echoed by the cTrader team is a sad no. But why is that? Why can’t US traders open an account and trade on cTrader? We are happy to shed some light on this sad situation.
Consolidation of the US Retail Forex Trading Industry
cTrader, in the grand scheme of things, is not offered by so many brokers, when considering there are thousands of forex brokers in Europe, Australia and offshore and only around 50 of those offer cTrader. In the United States, the number of brokers accepting retail accounts is in the single digits. By those ratios, it’s not surprising that none of the active US Forex brokers offers cTrader. Moreover, the consolidation left only the most established and well-capitalized forex brokers in the game, who have the funds to develop their own in-house trading platforms.
What Caused the Consolidation of the US Retail Forex market?
The regulatory environment in the United States is particularly harsh to brokers and traders alike. Most of the rules which triggered the consolidation were introduced with the Dodd-Frank Act, which brought a lot of new rules affecting all areas of the capital markets sector in the United States. These rules were introduced following the 2008 crash and crippled the retail forex trading industry.
The combination of rules and obligations from the NFA (National Futures Association), CFTC (Commodity Futures Trading Commission) and SEC (Securities Exchange Commission) who oversee retail forex brokers. Their rules made trading conditions less attractive to investors and their imposed reporting obligations made it more expensive to operate.
These rules disadvantage retail traders too, they cut leverage, prohibit hedging, ban CFDs (contracts for difference) entirely and prevent traders from opening accounts offshore. Both FXCM and Interactive Brokers exited the retail business of their domestic market, giving recent examples of the consolidation. But over the years the market has been consolidating heavily.
What Prevents New Players from Entering the US Retail Forex Market?
The main factor preventing new brokers from entering the retail forex market is the massive capital requirements. A forex broker in the United States would be required to lock $25 million of capital according to current legislation. Also, the millions of dollars they would need to spend in legal and application fees are a big demotivator. Moreover, the SEC is not shy when it comes to issuing fines, bans and sentences to retail brokers and their management.
The restrictions on leverage, the markets they can offer and the ban on hedging accounts really cut into the revenue potential of a broker. Operating a forex brokerage in Europe, Australia or offshore is much easier and cheaper in comparison.
Does cTrader Meet the Requirements of US legislation?
In 2013, Spotware added a netting feature which uses the first in first out offsetting rule for cTrader. This feature was introduced to make the platform compliant with US regulations. Actually, cTrader was available in the US for a short time. The platform was offered by MB Trading, however, this was also killed by the consolidation. MB Trading was acquired by TradeKing, then TradeKing was acquired by Ally, throughout this process they stopped offering cTrader.