Wednesday, December 27, 2017

MIFID2: What the actual f**k?!

Brandon Cragsley: Facepalm




My jaw dropped a couple days ago when I heard the latest news of the EU directive MIFID2. As part of the MIFID2 directive, brokers within the EU will cease to allow European customers to purchase American and Canadian ETFs and ETNs. What?! What the actual fuck?!

The directive was supposed to:

“strengthen investor protection and improvethe functioning of financial markets making them more efficient, resilient andtransparent.”


Yeah, so it will protect investors by blocking them from making purchases altogether.
The reasoning behind the block is, that as the products don’t have information available in all European languages, investors need to be protected (read: blocked) from such devious products. But the investors who are looking at American or Canadian ETFs probably know enough English to manage with the information provided in English. Thus rendering the block only as a nuisance.

What the regulators are trying to do here is protectionism but they’re only shooting themselves in their own foot; to circumvent the directive's blockage, European investors will need to take their business to a non-European broker. None of this shooting yourself in the foot makes any sense what so ever! 

At least one of my brokers, Nordnet, will impose the blocks in the 3rd of January. But then again, I don’t trade American or Canadian ETFs there due to the extortionate pricing. I just hope, that my other broker, Lynx, will not impose these blocks as I’m holding a multitude of American and Canadian ETFs (Vanguard, Horizons marijuana ETF, etc.) and intend to buy more.

If you know a trustworthy non-European broker that takes European customers, let me know please!

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