Is Trading CFDs in the US Illegal?

US financial markets are highly regulated and in some cases restricted. One of those restrictions covers US clients access to OTC (Over The Counter) derivatives, such as CFDs (Contracts For Differences). Effectively US citizens or residents are embargoed from trading these instruments and CFD providers from opening or holding accounts for the same.

Where US citizens and residents can trade OTC products,such as Margin Forex, they must do so through an entity that is regulated in the USA itself. This means US retail clients are “off limits” to the majority of European and Asian brokers.

Outside Looking In

But even though traders in the USA are not able to access and take advantage of the benefits of CFD trading. Traders outside of the USA can trade US markets via CFDs and Margin Forex.

That access presents traders with significant opportunities in some of the world’s largest investment pools. For example more than US$ 7.00 trillion worth of investments are benchmarked to the performance of the top 500 US equities via the US500 equity index
The US 500 index has itself enjoyed an almost unprecedented seven year bull market and has recently reached new all time highs. That trend may or may not continue but either way there are likely to be ongoing opportunities for traders in the US markets.

Furthermore technology is becoming more and more integral to our daily lives, the rise of cloud computing and its associated services are becoming indispensable to modern businesses. These are traits that are reflected in the performance and composition of the US 100 index, which tracks the performance of the top 100 US Tech shares.

Special Relationships

Of course the US Dollar, in its role as global reserve currency, is the backbone of the Forex market. The Dollar is involved in 88% of all Forex trades, according to the latest data from the Bank for International Settlements or BIS, the central bankers bank. That level of participation puts the Dollar and Dollar denominated assets centre stage in the world’s markets and has over time created many intrinsic relationships.

For instance the Dollar is seen as safe haven currency and is therefore often a destination of choice for cash during volatile or risk off periods in the markets. A strong US Dollar has also often been seen as being negative for commodity prices. Such as Gold Silver and Crude Oil and for commodity related currencies, such as the Canadian and Australian Dollars.

Change at the Top

US markets are of particular interest to investors right now as we are about to witness a change in government. With a new president and change in the ruling party after 8 years of Barack Obama and the Democratic party. Donald Trump, a Republican, will enter office as probably the most controversial President elect ever. His unorthodox and anti establishment approach to politics, which played so well with US voters, has left political and market analysts feverishly trying to understand what a Trump presidency will really mean. For both the USA and its relationships with the wider world. In truth we don’t have a clear picture yet and perhaps we won’t until the new administration is firmly in office. There is an old adage that the first 100 days of a Presidency sets the tone for the full four year term of office. That may never be truer, than in this instance. Once again traders will be watching what happens in Washington very carefully as Mr Trump’s radical agenda has the potential to throw up plenty of curveballs and associated trading opportunities.

Many Markets, One Account

Blackwell Global provides its clients with the ability to trade more than more than 60 products including US Equity indices, FX pairs Gold, Silver and both US and UK Crude Oil. All from one account and one trading platform. Full details of our offering can be found under the products tab on our home page.

To discover more about how traders can access US indices and Dollar centric products and trading opportunities, why not apply for either a Demo or Live CFD trading account and download our platform today.