Interactive Brokers is a global trading and money management platform designed to give investors all around the world a place where they can do business and invest. One of the reasons why the platform has already amassed over 1.3 millionactive accounts is that they cater to traders in all hemispheres.
Unfortunately, though, one of the most common error messages that international traders receive is: Contract not available for trading. So, what exactly does it mean?
Contract Is Not Available For Trading means that you are not allowed to trade that particular stock or fund. Most of the time that IBKR users get this message, it’s because they’re trying to invest in foreign stocks and funds. Often, a country may impose financial regulation on the trading of international funds in order to maintain a more stable investing environment.
If you’ve been getting this error message and you’re trying to figure out what you should do next, then you’ve come to the right place. Below, I’ll be discussing the most common reason that many IBKR members get this error, explain whyyou’re probably getting it, and the history behind the rules and regulations governing international trade.
Why Am I Getting The “Contract Is Not Available For Trading” Error?
Let me start by saying that I understand the frustration… You’ve done all of your research on a particular ETF fund by looking into its history, reading up on the top companies listed in the portfolio, you’re confident that it’s not going to correct anytime soon, and you’re ready to invest. You’ve set aside the funds, you enter the number of shares that you want to purchase, and then… NOTHING.
Instead, you get an angry little pop-up error on your screen that says “contract is not available for trading.” If you’ve been wondering whether or not it’s your card or bank account, I can almost guarantee that it’s not. Instantly, the frustration sets in. All of the hard work, studying, and back-and-forth debating that you’ve been doing in your head was for nothing. So, why exactly are you getting this error?
Trading Outside Of Your Country
The biggest reason why you may be getting this error is if you’re trying to trade ETFs (Exchange Traded Funds) from another country where you don’t live. For instance, if you live in England or any country that conforms to the EU’s guidelines on trading and financing, then you likely will not be able to invest in US-based ETFs. The same situation can apply, no matter what country you live in, though. It’s all up to the regulations that govern trade in your country, and these regulations can change at the drop of a dime, so there’s really no way to tell.
Why Are There Limits On Trading Global Stocks and ETFs?
As frustrated as you can feel when you’re in the moment, there’s actually a very specific reason why you’re probably getting this error message- you’re country has placed a virtual trade block on its citizens trading a fund listed in another country. This usually happens when one country has a certain standard of trade regulations that are not upheld by the other country where the particular fund is located.
One of the most common instances of this happening is between the United States and the EU. Recently, the EU created a regulation that states that all funds (which ETFs are) must follow what’s called the PRIIP system.
PRIIP stands for Packaged Retail and Insurance-based Investment Products. According to the new PRIIPs regulation, all funds must submit a KID (Key Information Document) to anybody who invests into the fund. This KID would include all of the necessary investment information and serve as a “cover your behind” document for the fund.
How Does The PRIIP KID Regulation Affect Investors?
Essentially, it states that the buyer is responsible for doing their research and that the fund cannot be held accountable in the event that the investment tanks and the investor ends up losing money on the deal. This means that EU funds are required to submit additional paperwork to all of their investors, no matter how great or small.
As you can imagine, the United States and the SEC don’t really care too much about these regulations, so the EU has prohibited all EU citizens from trading US-based ETFs. As a result, more and more EU investors have been switching their investments over to cryptocurrency investment platforms that don’t have as much regulation.
Is There A Way To Get Around The Trade Block?
It all sounds a bit glum, doesn’t it? Thankfully, there’s a very simple solution to getting around these regulations and purchasing your US tickers by registering your brokerage account with a US-based broker. The same applies to anybody who plans on investing in an ETF in another country. As long as you’re able to open up an investment account with a broker or [platform] that does business in the country you want to invest in, you shouldn’t have to worry about anything.
How To Buy US ETFs In Europe
So, you’ve registered with your US brokerage account, you’ll be able to trade stocks and ETFs the same as you would on an EU-based exchange. However, there are a few key differences that you should be aware of before you jump straight into trading. Providing that you can keep these words of wisdom in mind, you shouldn’t have any trouble putting some extra investment cash in your pocket. Here’s the shortlist that you should keep in mind:
Since US-based exchanges don’t comply to EU regulations, they’re not going to provide you with the paperwork that the EU requires you to file when it’s time to do your taxes. This means that you’ll need to print out the necessary paperwork yourself and fill it all out perfectly. This can be a daunting task if you’ve never done it before, so you may want to hire an accountant for this step of the process.
Possible Higher Taxes
Depending on which country you live in, you may have to pay a higher tax rate since you’re technically doing business overseas.