Yeah, because its not you, but the broker who has to follow the law (in this case): Not to offer any products that do not comply with EU regulations. IB-UK is an EU broker.
PRIIPS KID on IB
- Thread starter d08
- Start date
Yeah, because its not you, but the broker who has to follow the law (in this case): Not to offer any products that do not comply with EU regulations. IB-UK is an EU broker.
Well, here's another 'very well EU protected' investor, but because of this 'protection' here's also a very furious and highly frustrated investor. Even before all of this I was already unable to find words for just how much I detest the EU, but now with what they've done this time to me... I am almost exploding of anger whenever I hear anything about the EU. It seems they will do whatever they can think of to destroy, harm and ruin the lives of the poor souls living within the EU borders.
Ok, first, so IB is looking for a solution. And it seems they are wanting to do that by giving some the status of a professional trader instead of a retail one. I myself won't qualify if indeed I am required to meet 2 out of the 3 aforementioned conditions. But I am wondering in case you would want to be considered a professional trader/client, then what would be the disadvantages of that? Higher costs? But perhaps far more important than that, will you still be protected in case your broker goes out of business? If people would see themselves forced by these crazy 'protective' regulations to do this and indeed have less or no protection at all in case their broker would go out of business, then that again shows how well these EU maniacs are managing to protect us. I think it would be a much better idea if we would instead be protected against the insane regulations these totally incompetent and totally corrupt morons are producing. But it seems there's nobody or no institution willing and/or capable of doing that.
Second, since even people who are residing in Asia are also not allowed to purchase US ETFs through IB UK, one could perhaps draw the conclusion that these restrictions apply to all clients who have an account at a broker which is located anywhere within the EU, whether that is in Athens, London, Madrid, Helsinki or Budapest. So I was thinking, would it be possible to open an investing account in Switzerland? Or wouldn't we be allowed as EU citizens to open an account there, or would in case we would be allowed to open an account there, these insane regulations still apply to us? I am pretty sure that Swiss people living in Switzerland will still be able to trade all the US ETFs without any limitations.
Third, it has already cost me money. And I am pretty sure that there are countless others who have already incurred financial damages because of this insane ban of US ETFs. It's so frustrating to see an ETF you want to buy at a particular price in the pre-market, to see it then go up again. Knowing that the profit could have been yours. By the time the option market opened, the ETF was already above the price I wanted to buy it for. And so I couldn't buy a call option instead. Had I not been banned from this ETF, the ETF would already have hit my target price.
With another ETF I was able to buy a call option and sell it with a profit and that way I was able to still get the profit I would have gotten had I bought & sold the ETF itself (well a few dollars less). But the ETF had to drop to a lower price than the price I would have bought the ETF itself for, for me to get the call option because of the time/expectation value which was still in the option. Which it now did, had it not done so, I wouldn't have paid more for it and I could have missed out on that profit as well.
Haven't yet tried to buy an ETF by buying a call option and then have it exercised, but perhaps I will try it later in the week, just to see what will happen. I still have some written puts on an ETF, so they could be assigned to me at any given moment and then I shall find out what happens with that. I fear it will be nothing good.
Then finally... I never traded CFDs at Interactive Brokers, I was reluctant to do so, because I had to agree with a lot of regulations, which I didn't fully understand at the time and I thought that perhaps it would mean that I would no longer be protected by SIPC in America for up to $500,000, but then perhaps only be protected by the FCA in the UK for a maximum of GBP 50,000.
But it seems that there are at least a number of ETFs which can be traded as CFDs at IB. In the Netherlands where I am living there's a kind of a subsidiary (or something like that) of IB, called Lynx, they list 430 ETFs which can be traded as a CFD as an alternative. Including SPY, several Vanguard, ProShares, iShares and a few Direxion ETFs. Many of the ETFs (mostly leveraged ones) which I'm usually trading aren't there unfortunately. But I guess it's better than nothing.
So could these CFDs be an alternative? And if so, could IB not also be offering (way) more ETF CFDs as a solution to our problem? I do realize that there might be disadvantages to trading CFDs instead of ETFs (more risky in case of a default of your broker, only regular trading hours, etc.) , but again, it might still be better than nothing at all.
Have some of you already traded these ETF CFDs? And if so, could they indeed be a solution? Or are there problems/disadvantages that I am unaware of?
Ok, first, so IB is looking for a solution. And it seems they are wanting to do that by giving some the status of a professional trader instead of a retail one. I myself won't qualify if indeed I am required to meet 2 out of the 3 aforementioned conditions. But I am wondering in case you would want to be considered a professional trader/client, then what would be the disadvantages of that? Higher costs? But perhaps far more important than that, will you still be protected in case your broker goes out of business? If people would see themselves forced by these crazy 'protective' regulations to do this and indeed have less or no protection at all in case their broker would go out of business, then that again shows how well these EU maniacs are managing to protect us. I think it would be a much better idea if we would instead be protected against the insane regulations these totally incompetent and totally corrupt morons are producing. But it seems there's nobody or no institution willing and/or capable of doing that.
Second, since even people who are residing in Asia are also not allowed to purchase US ETFs through IB UK, one could perhaps draw the conclusion that these restrictions apply to all clients who have an account at a broker which is located anywhere within the EU, whether that is in Athens, London, Madrid, Helsinki or Budapest. So I was thinking, would it be possible to open an investing account in Switzerland? Or wouldn't we be allowed as EU citizens to open an account there, or would in case we would be allowed to open an account there, these insane regulations still apply to us? I am pretty sure that Swiss people living in Switzerland will still be able to trade all the US ETFs without any limitations.
Third, it has already cost me money. And I am pretty sure that there are countless others who have already incurred financial damages because of this insane ban of US ETFs. It's so frustrating to see an ETF you want to buy at a particular price in the pre-market, to see it then go up again. Knowing that the profit could have been yours. By the time the option market opened, the ETF was already above the price I wanted to buy it for. And so I couldn't buy a call option instead. Had I not been banned from this ETF, the ETF would already have hit my target price.
With another ETF I was able to buy a call option and sell it with a profit and that way I was able to still get the profit I would have gotten had I bought & sold the ETF itself (well a few dollars less). But the ETF had to drop to a lower price than the price I would have bought the ETF itself for, for me to get the call option because of the time/expectation value which was still in the option. Which it now did, had it not done so, I wouldn't have paid more for it and I could have missed out on that profit as well.
Haven't yet tried to buy an ETF by buying a call option and then have it exercised, but perhaps I will try it later in the week, just to see what will happen. I still have some written puts on an ETF, so they could be assigned to me at any given moment and then I shall find out what happens with that. I fear it will be nothing good.
Then finally... I never traded CFDs at Interactive Brokers, I was reluctant to do so, because I had to agree with a lot of regulations, which I didn't fully understand at the time and I thought that perhaps it would mean that I would no longer be protected by SIPC in America for up to $500,000, but then perhaps only be protected by the FCA in the UK for a maximum of GBP 50,000.
But it seems that there are at least a number of ETFs which can be traded as CFDs at IB. In the Netherlands where I am living there's a kind of a subsidiary (or something like that) of IB, called Lynx, they list 430 ETFs which can be traded as a CFD as an alternative. Including SPY, several Vanguard, ProShares, iShares and a few Direxion ETFs. Many of the ETFs (mostly leveraged ones) which I'm usually trading aren't there unfortunately. But I guess it's better than nothing.
So could these CFDs be an alternative? And if so, could IB not also be offering (way) more ETF CFDs as a solution to our problem? I do realize that there might be disadvantages to trading CFDs instead of ETFs (more risky in case of a default of your broker, only regular trading hours, etc.) , but again, it might still be better than nothing at all.
Have some of you already traded these ETF CFDs? And if so, could they indeed be a solution? Or are there problems/disadvantages that I am unaware of?
Exactly what has happened to me
What about IB Hong Kong? @luisHK is a HK resident I believe, I cannot fathom why IB would deny the transfer.
CFD orders can fail to execute, they require a counter-party which mirrored from the underlying. You can have a market order in a highly liquid security and the trade won't go through. Has happened to me multiple times in the past and IB said it all functioned as expected.
I'm not sure how often this is an issue for extremely liquid ETFs but it's most definitely a possible problem.
Makes sense now. Thank you for clarifying.
So to sum up, the single criteria to decide whether one can trade US ETFs at an EU broker is the investor status then i.e. retail or professional.
Thanks for your reply. That would indeed be a problem. And not one I would have expected. Nevertheless, if I have to choose between not being able to trade an ETF at all or being able to trade a CFD of that ETF with occasional such an issue, then I would probably still choose the latter, however, it would also depend upon how often this problem would occur.
One of the things with CFD is the conflict of interest. I dunno who are the issuers of these CFD's of the US ETF's in EU but I know in forex trading, any forex CFD's issuers are usually the broker itself and the broker is also the principal to those CFD's. So in other words when you are trading in those forex CFD's, you are trading directly against the broker and vice versa and the broker becomes the counterparty to all your trades even though it could be operating in an ECN or agency business model and that creates a tremendous amoun of conflict of interest and it could open up for lots of opportunities for price and trade manipulations on the broker's part.
I hope it's different in the case of these ETF CFD's in EU.
No, the single criteria to decide whether one can trade US ETFs at an EU broker is the investor status then i.e. retail or professional for IB only, not at other brokers. This is only what IB is working on with the EU regulators to get around this regulations. And this investor status is only for IB EU clients only. Other brokers in EU would still flatly block you from trading the US ETF's who haven't filed the KID.
Yes and I dunno why a resident in Hong Kong or Australia would trade with IB UK, they should be trading with IB HK. IB usually make you trade with only the local IB office of your residence.