Confused about the new law and US ETFs. Will IB still let me buy them?

New to all this, but from what I understand there is a change in the law and IB might be required to stop selling US ETFs (namely Vanguard VT) to us, Swiss residents from Jan 2020.

Did I misunderstand, or is there no way anymore to buy US ETFs from Switzerland with IB?

What makes you think that would be the case?

We can still buy it.

2 Likes

For example: https://thepoorswiss.com/swiss-investors-lose-access-us-domiciled-etfs/

This is pure speculation by somebody who is making money with clicks.
Nobody (except the people at IB, who wouldn’t tell) knew exactly until two days ago.
Now it is 2020 and IB still lets you buy US ETFs.

I am not making any money with clicks on this article

And this is not pure speculation since these laws are going into effect and DEGIRO actually applied them earlier than they should have. In the article, I do not still that IB will stop, just that they may stop which is something that was also discussed at length on this forum.

2 Likes

Degiro is European, IB is American. So different laws apply.

My understanding is that, if FinIA/FinSA indeed impacts IB’s Swiss customers, the provision that requires funds to provide a KID won’t take affect until January 1, 2022.

Source: https://www.cms-lawnow.com/

Does someone interpret this document differently (last row on page 1)?

1 Like

Hi there – I am new around but just wanted to provide my point of view on this question.

Although I have no specific knowledge of this particular field of the law (i.e. FinSA and FinIA) and no particular information from IB, I can confirm that not much should change before 1 January 2022, as mentioned by Mustachioed.

It is very customary to have transitions periods when a new Swiss law becomes applicable. In this case the concerned companies often don’t do much before the end of the deadline.

Besides, the Key Investor Information Document (KIID) seems to be a rather simple document of three pages that any junior lawyer might create and would not require much investments/costs from a legal point of view for the concerned companies. Furthermore, these requirement are stemming from international regulations that the FinIA and FinSA are only complying with. But as I mentioned, I am not a specialist of this industry so I might miss something important.

For persons reading French, here is the reasoning of the Federal Council regarding the requirement to implement a KIID.

“Les efforts de rĂ©glementation de l’UE visant Ă  assurer la fourniture d’informations sur les produits qui soient simples et comparables entre elles portent aussi sur les placements collectifs de capitaux. Depuis le 1er juillet 2011, ces placements doivent ĂȘtre accompagnĂ©s d’un document succinct intitulĂ© «Informations clĂ©s pour l’investisseur» (Key Investor Information Document, KIID). Ce document doit inclure «les informations appropriĂ©es sur les caractĂ©ristiques essentielles» du placement collectif concernĂ©, «devant ĂȘtre fournies aux investisseurs afin que ceux-ci puissent raisonnablement comprendre la nature et les risques du produit d’investissement qui leur est proposĂ© et, par voie de consĂ©quence, prendre des dĂ©cisions en matiĂšre de placement en pleine connaissance de cause». L’UE a publiĂ© le rĂšglement PRIIP le 26 novembre 2014, Ă  la suite de la crise financiĂšre et pour amĂ©liorer la comprĂ©hension des produits financiers complexes par les petits investisseurs. Ce rĂšglement oblige les producteurs et les distributeurs de produits d’investissement Ă  remettre aux investisseurs des documents d’informations clĂ©s sur les produits, afin que les petits investisseurs puissent comprendre et comparer les principales caractĂ©ristiques et les principaux risques de ces produits. Le document d’informations clĂ©s regroupe sur trois pages maximum les principales indications sur le produit dont les investisseurs ont besoin pour prendre une dĂ©cision d’investissement fondĂ©e. Ces rĂšgles s’appliquent aux produits d’investissement packagĂ©s de dĂ©tail et fondĂ©s sur l’assurance (Ă©galement dĂ©signĂ©s par l’abrĂ©viation PRIIP). Ce sont des produits d’investissement standard qu’une banque propose gĂ©nĂ©ralement Ă  ses clients, par exemple, pour Ă©pargner en vue d’un objectif prĂ©cis (achat immobilier ou formation d’un enfant). En font partie les fonds d’investissement, les produits d’investissement fondĂ©s sur l’assurance, les produits structurĂ©s et les placements structurĂ©s Ă  terme. Le rĂšglement sera valable Ă  compter du 31 dĂ©cembre 2016. En Allemagne, des feuilles d’information comparables sont d’ores et dĂ©jĂ  obligatoires dans le domaine du conseil en investissement. » source : https://www.admin.ch/opc/fr/federal-gazette/2015/8101.pdf pp. 8134 para. 1.7.3.2.

1 Like

US domiciled ETFs have made it clear they won’t provide them (those providers have UCITS versions of their ETFs marketed for the EU). But anyway it very likely won’t matter, there’s so may carve-outs in the swiss law (reverse solicitation, increasing existing positions, foreign brokers, 
).

(That said regardless of legislation, there’s nothing preventing a broker from stopping to offer them, similar to Degiro)

For information, I asked and receive this answer yesterday from IB’s client service:

“Switzerland has implemented a regulation similar to PRIIPS and therefore Swiss residents classified as Retail investors cannot trade US domiciled ETFs.”

I think they mixed it up with Sweden.

In IBKR, go to

  • settings
  • account settings
  • “configuration” at the right side of the page
  • click the wheel behind “MIFID client category”

Most people will be sth like private or retail clients (no US ETF). You can ask to be upgraded.

Obviously they did not, as Sweden is subject to PRIIPS proper - which as a EU regulation becomes immediately enforceable, without needing to be transposed into Swedish law.

Whereas the wording of a regulation „similar to PRIIPS“ indicates a (non-EU) country where the EU PRIIPS regulation is not in force.

I think he is making a joke. https://www.reuters.com/article/us-spotify-ipo-flag/nyse-spotifys-market-debut-and-the-swiss-miss-idUSKCN1HA2N2

1 Like

Two days ago, I was still happily buying VT.
I am listed as retail client, though ‘has implemented’ and ‘cannot trade US domiciled ETFs’ sounds like I already should not have been able too.

At least you know where IB sees you once the new rules go into effect in Switzerland. Hope, of course, dies last.

I just tried buying an ETF I did not have before, still works for me. I’m starting to guess the state of their internal systems is pretty confused.

they do not say you cannot buy US ETF but you cannot trade it
probably buy and hold is not trading :slight_smile:
did you try to sell it?

I am pretty certain trading involves buying just as well as selling.
Also, for this to make sense, they naturally have to let you sell the US shares you already own at some point.

1 Like
By reading and partipating to this forum, you confirm you have read and agree with the disclaimer presented on http://www.mustachianpost.com/
En lisant et participant Ă  ce forum, vous confirmez avoir lu et ĂȘtre d'accord avec l'avis de dĂ©gagement de responsabilitĂ© prĂ©sentĂ© sur http://www.mustachianpost.com/fr/