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I am trying to buy an ETF using my account in Interactive Brokers. I am surprised to see that it is not possible. I am living in Europe and trying to buy an ETF in US dollars.

Their response to me:

UK Retail clients are restricted from trading in US ETFs. Opening orders from retail investors residing in the European Economic Area (EEA) who attempt to enter an opening order that are associated with a product that does not comply with the EU's Packaged Retail and Insurance-based Investment Product Regulation (PRIIPS) will be rejected. The regulation is intended to enhance understanding of these products through the provision of disclosure documentation. This documentation is referred to as the Key Information Document (or "KID") which. The KID provides information such as product description, costs, risks & performance.

This seems to be a new regulation for EU citizens. Anyone else face this issue? What would be the best route for buying into an ETF as a person living in Europe?

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    I've not bought/attempted-to-buy US ETFs, so this is speculation, but you might want to ask whether it applies to all_US ETFs, or selected ones. It may be that some _do comply with PRIIPS but others (including, presumably, the one you wanted to buy) do not. – TripeHound Aug 23 '19 at 6:39
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    it is all US-domiciled ETFs it seems justetf.com/uk/news/etf/us-domiciled-etfs.html – bp2010 Aug 23 '19 at 14:20
  • Most US popular ETF has a local counterpart in London and Frankfurt stock exchange. Though the annual fees of those ETFs may be slightly higher, it will save you the hassle of currency conversion – mootmoot Sep 3 '19 at 13:43
  • Does anyone know if these EU restrictions still apply to UK-resident retail investors now that the Brexit transition period has ended? – bjmc Feb 2 at 21:02
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    Answering my own question: "The UK left the EU in January 2020, but created its own 'UK PRIIPs' regime that is fully aligned with the EU PRIIPs, so PRIIPs restrictions continue to apply in the UK." cites gov.uk/government/publications/… – bjmc Feb 2 at 21:04
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If you have only EU/UK tax residency, you can buy any ETF with "UCITS" in the name - those conform to the new consumer information regulations. I gather that the expense ratios often aren't quite as favorable as the US domiciled ones, but I would do it anyway. Here are some that track the S&P 500: https://www.justetf.com/gb-en/find-etf.html?assetClass=class-equity&country=US&index=S%2526P%2B500%25C2%25AE

On the other hand if, like me, you are a US citizen residing in the EU/UK, do NOT buy an ETF that is not domiciled in the US. Why: https://thunfinancial.com/home/american-expat-financial-advice-research-articles/american-expat-pfic-uk-non-reporting-fund-investment-trap-article/

I'm currently looking for a solution for myself and will post a follow-up comment here if I find one any simpler than DIY direct indexing.

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    hi @Amanda thanks for the response. I just tried with this gold etf justetf.com/uk/… on IB but it also does not work. (ticker GDX) It gives me the same response about being a retail customer – bp2010 Sep 4 '19 at 18:45
  • That's surprising, as they have a KIID... – Amanda Debler Dec 3 '19 at 8:19
  • Great article, Amanda. "...over the last couple of years, a core of U.S. registered mutual funds and ETFs have been granted UK “reporting fund” status: they both avoid the PFIC trap in the United States and the “non-reporting fund” trap in the United Kingdom. The list of U.S. funds with UK reporting status now includes a core of excellent, efficient ETFs (mostly Vanguard). From these funds a fully diversified, global investment portfolio of stocks, bonds, commodities and real estate can be constructed, just as Thun Financial builds for its global clients elsewhere in the world." – MXMLLN Mar 3 at 8:44
  • The Thun article only seemed to cover the US - UK case. Why do you want against European-domiciled ETFs for US citizens residing in the EU? – MXMLLN Mar 3 at 8:46
  • @MXMLLN: US tax liability. – Amanda Debler Mar 4 at 7:56
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Tradestation allows buying US ETFs by EU residents but their commission is higher than IB (5$ in/out trade).

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I see 2 possibilities:

  • The justETF post in your link suggests that it may help to get yourself listed as "experienced investor" to get access to these ETFs via your European broker. I'd certainly ask them.
  • The second possibility is to open an international brokerage account in the US. That would also avoid a currency conversion every time you do anything. Conversion happens only when you wire money between your USD and EUR/GBP/... account.

You'll have some tax bureaucracy getting non-citizen non-resident tax status but something along those lines would probably also be needed when buying the US ETF at your domestic broker.

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    Most US brokerages will not let EU residents buy ETFs, even if they are US citizens. I opened a Schwab account because they were one of the few that were still allowing EU residents to buy ETFs, but even they had to stop letting us do that this September. I am still looking for a solution. – Amanda Debler Dec 3 '19 at 8:18
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I was recently informed by customer service at IB that you are allowed to keep the underlying if your options are assigned ! But make sure your underlying are HMRC reporting! https://www.bogleheads.org/wiki/Vanguard_US_domiciled_ETFs_that_are_HMRC_reporting_funds , and you have enough cash/ margin to buy 100 x ETF.

Therefore, sell some ATM (or slightly OTM) puts in VOO (or similar), collect the premium , collect 100 shares of ETF on assignment!

Can anyone else confirm this?

https://www.gov.uk/government/publications/offshore-funds-list-of-reporting-funds

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    nothing vague here Bob! EU residents are not allowed to purchase US domiciled ETFs, however, they can trade options. Selling (shorting) OTM puts is a pretty common way of trying to acquire the underlying below the market price. not sure why you would short a call to acquire the underlying ! Selling ITM puts near to expiration would (almost) guarantee assignment, however, there is little or no risk. May not pass tax scrutiny. – MH512 Jun 17 '20 at 0:38

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