No KID/KIID documents available for the ETFs in which I would like to invest

alexanderalexander · 13 January 2018 at 2:07PM

I'm trying to buy a couple of overseas-domiciled ETFs (they're domiciled in the USA and France respectively), but when I try to place the trade my platform won't let me, showing the message "We are unable to trade this security as there is no KID/KIID document available."

I was vaguely aware that some rules regarding investor information had changed recently, and that platforms have withdrawn some funds as a result of them not complying. However, this is quite frustrating for me as I want exposure to a fairly obscure market which is only available via these two ETFs. Does anyone know if there's any way around this? Or, alternatively, are these overseas-domiciled ETFs likely to make KID/KIID documents available any time soon?

ivormonee · 13 January 2018 at 3:29PM

The new rules that came into play at the start of 2018 mean that no funds without KIDs can be traded on any platform. In the case of US ETFs it's unlikely they'll be rushing to make them available. What market(s)/ ETFs were you looking to invest in?

alexanderalexander · 13 January 2018 at 3:55PM

ivormonee wrote: »

The new rules that came into play at the start of 2018 mean that no funds without KIDs can be traded on any platform. In the case of US ETFs it's unlikely they'll be rushing to make them available. What market(s)/ ETFs were you looking to invest in?

Thank you for the reply. Why do you say it's unlikely that US ETFs will have KIDs available soon, by the way?

I'm looking to invest in the Greek stock market (I'm well aware of the risks by the way, but I'm looking to invest a pot of money which I've specifically set aside for more speculative punts). The two ETFs which I've looked at are Lyxor FTSE Athex Large Cap UCITS ETF (domiciled in France) and Global X MSCI Greece ETF (domiciled in the USA). Any ideas as to whether these are likely to have KIDs soon?

Also, although I don't believe that there are any other internationally-purchasable ETFs/OEICs/investment trusts which solely cover the Greek market, if anyone does know of any I'd be grateful if you could let me know.

ivormonee · 13 January 2018 at 4:13PM

I've not looked into this segment of the market in any detail. It's a shame there aren't more readily available options to invest in it.

The regulations in question are called Priips (packaged retail insurance-based investment products).

Just looked at the Lyxor factsheet. The fund is listed on three EU stock exchanges, and I think all EU countries are subject to the same rules, so investors in those countries would also find it difficult to invest in that ETF. Interestingly, Lyxor do not list it on their website at all, which makes no sense. I would expect Lyxor to provide the KID as the ETF is aimed at the EU market and therefore by not providing it they are going to lose investors. Again, this would make no sense.

The Global X fund, on looking at their factsheet, is listed only on part of NYSE and is aimed at US investors. As the rules don't apply to the US they wouldn't need a KID. As a result they more than likely would not produce KIDs because they are US domiciled and are probably not bothered about availability in Europe. For a UK resident this would mean that it would be unavailable via a UK broker or platform.

So to summarise, I would expect that the Lyxor ETF should become available for investment and they should probably already be working towards getting the KID sent to all platforms to facilitate this whilst the Global X is quite unlikely (but not impossible) to be made available.

If you are really keen to invest you might want to give Lyxor a call and see what they say (Global X too for that matter). If you do, it would be interesting to find out what they tell you.

Morphoton · 13 January 2018 at 4:18PM

According to the link below there is a KID available for the Lyxor ETF but it's in German. See the document section as it can be downloaded.
Is language also a consideration with regard to this ridiculous new regulation ?
https://www.justetf.com/de-en/etf-profile.html?isin=FR0010405431

grey_gym_sock · 14 January 2018 at 2:57AM

yes, language may be a consideration; e.g. for UK-based investors they may think there should be a KID in english.

however, while PRIIPS is an EU regulation, it may be implemented differently in different countries, and it appears even interpreted differently by different brokers.

for instance, aj bell youinvest have allowed me to buy (more of) a US ETF since these regulations came in. their website displayed a message that their data provider didn't have a KID available, with the suggestion to look for it on the fund manager's website.

maybe aj bell are getting it wrong, and the FCA will tell them to do it differently. or maybe other brokers, some of whom have stopped all new purchases of US ETFs, are being unnecessarily strict.

assuming KIDs are necessary ... i've seen various people comment that they don't expect US ETFs to ever produce KIDs. i wonder whether this is correct. of course US ETFs' primary market is investors in the US, who don't need KIDs. but some US ETFs (not all) have gone to the trouble of becoming reporting funds for the purposes of UK tax, which can only be for the benefit for UK investors buying US ETFs. so why not KIDs?

dunstonh · 14 January 2018 at 12:26PM

Whist MiFID II started on 3rd January, most platforms and fund houses are not in yet fully compliant with it. Even the regulator has said it doesnt expect everyone to have full compliance by the 3rd Jan and will not take enforcement action against firms that are not fully compliant yet as long as they are moving towards compliance and taking it seriously.
2018 is being seen as a bedding in year.

There is a number of things that the guidelines are not clear on and further clarification is being sought or different firms are taking different views and will need to amend them as time goes on.

aroominyork · 14 January 2018 at 3:25PM

I have the same issue with ITEQ, a US-based ETF for Israeli hi-tech companies, which I bought on 28 December through Hargreaves Lansdown (unaware of the impending rule change). HL now shows it as unavailable since there is no KIID. Interactive Investor, who I am in the middle of switching to, seem to have it live. I wrote to ITEQ's fund manager earlier in the month but had no reply.

So if they do not produce KIIDs, what happens to the ETF I hold? How will I be able to sell it?

Edit: I'm also wondering if my in specie transfer of the ETF from HL to II will go through?

redux · 14 January 2018 at 5:20PM

HL's platform is occasionally producing a message like this for even well-known investment trusts.

grey_gym_sock · 14 January 2018 at 5:48PM

redux wrote: »

HL's platform is occasionally producing a message like this for even well-known investment trusts.

some investment trusts have been tardy in producing KIDs. but they will presumably all be doing so (unless perhaps they're about to wind up anyway). so this should be a temporary issue.

aroominyork wrote: »

So if they do not produce KIIDs, what happens to the ETF I hold? How will I be able to sell it?

i think HL are still allowing you to sell at any time. just not to buy any more.

Edit: I'm also wondering if my in specie transfer of the ETF from HL to II will go through?

transferring isn't buying, so this should be allowed.

so long as your destination broker has the ETF as generally available, the transfer should go smoothly. if the destination broker were to mark the ETF as no longer buyable, then i don't know whether their systems would block accepting a transfer in.

redux · 14 January 2018 at 6:13PM

grey_gym_sock wrote: »

some investment trusts have been tardy in producing KIDs. but they will presumably all be doing so (unless perhaps they're about to wind up anyway). so this should be a temporary issue.

I didn't mean it quite like that. It's as if HL's database was fading in and out, sometimes there sometimes not. Even Jupiter European Opportunities and some JPM trusts disappeared overnight a few days ago, and Mercantile again a day or two ago.

No KID/KIID documents available for the ETFs in which I would like to invest

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