Although based and regulated only in Cyprus, Trading Point of Financial Services has been caught recruiting brokers from the United States, despite its lack of NFA regulation. Known for enticing traders with its unusually high Forex bonuses and promotions, Trading Point has been fined $140,000 by the CFTC and has been commanded to close all accounts of US citizens and to return their money.
In addition, Trading Point was requested to put a noticeable disclaimer on their site announcing that it does not accept US traders, something which many internationally-based regulated Forex brokers already do. The CFTC claims that Trading Point is violating the 2008 Frank Dodd bill which provides strict rules for retail Forex brokers. The goal of the bill was to protect US consumer interests in light of the financial crisis. In recent months the CFTC has been pursuing both Forex brokers and money managers within the US and abroad that have failed to comply with the bill's demands.
According to a recent article in the Financial Times, however, internationally-based Forex brokers are not the only ones dragging their heels against the implementation of the Frank Dodd bill's stipulations – EU legislators have requested a gradual compliance to US regulations, rather than an immediate shift in their policies, as the CFTC regulations are still somewhat confusing and complicated for financial institutions based across the pond.
Whether Trading Point will comply with the ruling has yet to be seen, and the issue raises additional questions about how a US governing body can realistically enforce its laws and stipulations on external institutions that are regulated by other governing bodies. It seems that the haste with which the Frank Dodd bill was past may end up causing problems for the CFTC that will need to be addressed in the very near future.