You people do realise that the new BIB rules don’t apply until 2022 anyway?
Seeing as IB don’t have to pay stamp duty, it’s hard to see how they could be forced to enforce FIDLEG, but I do realise they’re very separate areas of law.
Has anyone tried to buy a US ETF through IB recently?
I just opened an IB account, and today tried to purchase two US-domiciled ETFs (IVW and SPLB). Both orders showed up in my Orders list as cancelled.
I wrote IB a message asking if I needed to do anything else and the answer I have received tonight is pasted below. To pre-empt the question I am not interested in registering as a professional trader. My questions are twofold:
- Has anyone else successfully bought US ETFs through IB recently?
- Are there recommendations for other brokers that have similar low cost for currency conversion for a >100k account with a buy and hold pattern of trading?
Thank you for your message.
We have been rejecting orders from retails investors residing in the European Economic Area (EEA) who attempt to enter an opening order associated with a product that does not comply with the EU’s Packaged Retail and Insurance-based Investment Product Regulation (PRIIPS). The regulation is intended to enhance understanding of these products through provision of disclosure documentation. This documentation is referred to as the Key Information Document or “KID”) which provides information such as product description, costs, risks & performance.
The products that this applies to have returns associated with a reference value and include derivatives (options and futures), ETFs, ETNs, funds and certain debt instruments. It does not apply to stock, FX and standard bonds. Orders will be rejected if the manufacturer, or issuer, of the product has decided not to provide the KID required to distribute the product to EEA retail residents.
If you wish to trade US ETFs you can either trade the Options and CFDs on the ETFs or you can apply to be set as Professional. To be able to upgrade to professional you have to meet two of the following requirements:
-you have carried out trades in significant size on the relevant market at an average frequency of 10 per quarter over the previous four quarters;
-your portfolio including cash exceeds EUR 500,000;
-you have worked in the financial sector for at least one year in a professional position.
To apply as a professional please follow the steps below:
Log in -> Account Management -> Settings -> Account settings -> MiFID Client Category
Please keep in mind that the requirements don’t have to be met solemnly with the IB account. If you have any other account which can be added to your IB account please provide us a document together with the form (eg. if you have 200K in your IB account and have 400K in you private account, that would mean you meet the second requirement.)
If you have any further questions please do not hesitate to contact us.
Kind Regards
Anais
IBKR Client Services
2 Likes
…and I should have added that I wrote back to them pointing out Switzerland is NOT a member of the EEA.
DM
1 Like
It worked for me on Monday. Also, US markets are closed today so I don’t think you could have bought anything.
1 Like
Wow, that sucks. I was planning to buy shares tomorrow. So we’ll how it is.
Good catch, that’s the first thing I thought of. Sadly it looks like organisations include or exclude Switzerland at their convenience.
1 Like
Out of curiosity, I just placed a small order for VTI. So far, nothing unusual happened. The order is pending - but as @Gesk pointed out, today is Thanksgiving, so the NYSE is closed today. I expect the order to be executed tomorrow. (I will post here tomorrow.)
I also have another order on VTI which has been open for several weeks (it’s an order at 149.00$ - I was speculating on falling prices in October…turned out that was a bad idea 
).
So I am wondering what is happening in your case. Maybe you can provide us some more details? What kind of order did you try to place?
Also you said you opened your account just recently. Are you Swiss OR have Swiss residency? Do you pay taxes only in Switzerland? Was anything unusual when you opened your IBKR account (did you have to provide special documents, etc.)?
It might be that new accounts have to follow this rule, while the old might be considered as professional, since you have to “show” competence before you are allowed to use IB.
It’s Thanksgiving today.
It will work tomorrow.
End of story.
And Anais at the customer service had her first day.
2 Likes
I bought VT two days ago and it worked normally.
1 Like
Is it possible they allow people to increase their position but not to establish a new one?
Thanks for the comments.
I don’t think there is anything so unusual about my situation. Here’s a rundown of the specifics:
- It’s a new, joint account with my wife.
- I’m Canadian, resident in Switzerland since 1997, paying Swiss taxes and non-resident for tax purposes in Canada. My wife is Swiss.
- Because it’s a new account I am not increasing positions, these would be new positions.
- In both cases I was placing a daily limit order, using the ask price as the limit.
- Perhaps the only thing where I am unsure of how IB operates is that I transferred in 100k CHF after the account opened and have relied on changing the base currency from CHF (which I set the account up with) to USD to convert that balance to USD. I currently see a balance in my account of just over 100,000 USD showing so I think the CHF I transferred in have been converted but I have not downloaded TWS and explicitly converted currency. So I suppose it may be possible that the funds in the account are still CHF and the orders are being cancelled because of that, but for me this seems unlikely. Still, among those of you here who have IB I should know quite quickly if simply setting up the base account currency as USD is sufficient to have any funds transferred into the account in CHF being made available for trading in USD. My net liquidation value and buying power are both showing in USD.
And as followup I have no further word from Anais or any other IB staffer yet and from the looks of things now have to wait till the US holiday weekend is over to advance further with this. Consensus here seems to be this should work so I will hang in there with IB. Otherwise I will be looking to open another account with another broker that will allow me to transact US-domiciled ETFs.
Tx again for the comments and your experiences.
Only if you opened a Margin account. If you have a Cash account, you cannot trade until you actually convert the currency. Changing the account base currency is only cosmetic.
By the way I still have some hanging orders at IB and none were cancelled so your situation must be unique.
By the way, since you haven’t executed any trades until now, make sure you have changed the pricing structure from Fixed to Tiered and that you have the W8-BEN filled to pay 15% instead of 30% withholding tax on US securities.
1 Like
also in order to trade and exchange currency, you have to fill the self-evaluation of your trading skills. if you set too low values, you will not be allowed to trade. I initially set something like 2 years exp and 50 trades and then i contacted support and they said to put 4 years and 100 trades. and when I asked why, they said “you want to trade or not!?”. I shit you not 
Ah…thank you Glina.
It’s a cash, not a margin account (and configured for tiered pricing). I wondered if the base currency change might only be cosmetic.
So I will convert my 100k CHF to USD. Might hold off on that for a few days though…USD.CHF is curently 1.00011 whereas its been around .98 - .99 more recently.
I assume it doesn’t matter if I buy USD.CHF on client portal or TWS but tx if someone can clarify.
Once I’ve converted I will try again to buy those positions and report back here if the orders are cancelled again.
Just read your comment after I posted Bojack.
Where do I find the self-evaluation of trading skills please? Or does that automatically pop up when I make my first buy order on a currency pair? Still familiarising myself with the client portal interface…I did have to fill in some basic experience questions on opening the account but I don’t see anything in User settings or Account settings that looks set up to give me a quiz on trading skills…
As promised, update from today: my order which I placed yesterday got executed today. (It was a limit order for VTI at 160$, „good til cancel“.) Thus, it is still possible to buy US ETFs.
You mentioned that you placed a daily limit order yesterday. Yesterday was a holiday at the NYSE. So that may be the reason why your order got cancelled immediately. (And Anais might just have given you a wrong answer.)
Did you place another order today?
1 Like
I also bought some shares without issues today. Including a share of something I never bought before on IB.
Same here. No problem with the execution