Many DEGIRO users across various countries, including Belgium, Greece, Poland, the Czech Republic, Switzerland, and others, have reported an inability to find a range of Exchange-Traded Funds (ETFs) on the platform.
This change has confused investors, who are eager to understand the reasons behind the restricted access and whether there are any potential solutions.
In this article, we will explore why some ETFs do not appear for some DEGIRO users.
Understanding the regulatory changes
The core issue stems from the European Commission’s new regulations, explicitly concerning Packaged Retail and Insurance-based Investment Products (PRIIPs). These regulations require that issuers of ETFs provide a Key Investor Document (KID) in the local language of the country where the product is being distributed. These financial products must also be “passported” for distribution in each country.
“Passporting” is a regulatory mechanism that allows a financial product to be sold across different countries within the European Economic Area (EEA) once the regulatory authority has approved it in one member state. However, this process requires that the KID, which provides crucial information about the investment product, be available in the local language of the country where the product is being offered.
As a result, many previously available ETFs on DEGIRO in some countries have been withdrawn from the platform because they need to meet these updated regulatory requirements. Specifically, some ETFs may have a KID available in English, but if they have not been passported for the specific country where the investor is located, and the KID is not available in the local language, these products cannot be offered for trade.
Impact on DEGIRO users
This limitation is particularly frustrating for investors wishing to continue building positions in these products. However, it’s important to note that while new positions cannot be opened, existing positions in these ETFs can still be maintained or closed.
This change is not due to any decision made by DEGIRO itself but rather a consequence of the European Commission’s regulations, which place the responsibility on ETF issuers to ensure compliance.
Why Are VUAA, VUSA, and VWCE not available on DEGIRO?
As mentioned before, the unavailability of popular ETFs like VUAA, VUSA, and VWCE on DEGIRO is directly linked to the European Commission’s regulations on PRIIPs.
These Vanguard-issued ETFs are popular among European investors due to their low costs and broad market exposure. However, despite their popularity, they have been removed from DEGIRO’s platform in certain countries because they do not comply with the new regulatory requirements for PRIIPs.
As an example, the Vanguard S&P 500 UCITS ETF can only be marketed in these countries:
Again, to offer these ETFs in any European country, Vanguard must provide a KID in the local language and ensure the ETF is passported for distribution in that country.
If Vanguard has not completed this process for a specific country, the ETF cannot be offered on DEGIRO’s platform there. This issue isn’t unique to DEGIRO; it’s a challenge across multiple brokerage platforms where ETFs must comply with local regulatory standards to be made available to investors.
What can investors do? A viable workaround
Instead of searching for a particular ETF to invest in DEGIRO, adopt a different approach: use DEGIRO’s search to type the index that the ETFs replicate. We will use the Vanguard S&P 500 UCITS ETF (VUAA) as an example.
The VUAA tracks the “S&P 500 index”. So, if you search for “S&P 500”, these are the ETFs that come up in DEGIRO:
In the screenshot above, you will notice that VUAA appears in the search results. That’s because I am searching from a country that allows me to invest in that ETF.
Not all of them replicate the S&P 500 index (some are deviations of that index). You can check that in the factsheets of each ETF. As a rule of thumb, if the name “S&P500” is immediately followed by the word “UCITS”, you will most likely be investing in an ETF replicating that index.
Should I open an account with a different broker?
Given the restrictions on certain ETFs, some investors might consider opening an account with a different European broker to bypass these limitations. However, it is essential to understand that simply switching brokers may be needed to solve the issue.
The unavailability of these ETFs is tied to the regulations in the investor’s country of residence, not the broker itself. Therefore, if an ETF is not passported or the KID is not available in the local language, other brokers operating under the same regulations should be unable to offer these products. In essence, your country’s regulatory environment dictates whether you can access these ETFs, regardless of which broker you use.
That said, some investors have found that certain brokers, particularly those with operations in multiple countries, might offer a broader range of ETFs due to varying compliance with local regulations.
Additional insights on the PRIIPs regulation
The PRIIPs regulation, which has significantly impacted the availability of ETFs on platforms like DEGIRO, is part of a broader initiative to increase transparency and protect retail investors across the European Union. However, this regulation has also led to unintended consequences for investors, such as the limited availability of certain financial products.
One significant issue is that the regulation has made it difficult for retail investors to access U.S.-domiciled ETFs. These ETFs, including those issued by Vanguard and iShares, do not meet the PRIIPs requirements because they lack a KID in the necessary local languages or have not been passported for distribution in Europe.
Moreover, implementing PRIIPs has created a fragmented market where investment product availability varies significantly from country to country. This lack of uniformity can frustrate investors, especially those accustomed to the broader range of investment options available in other regions, like the United States.
As a side note, European ETFs are still a better option than the US-based ones. This article explains why this is.
Bottom line
The unavailability of certain ETFs on DEGIRO is a direct consequence of European regulations that protect investors by ensuring they have access to key information in their local language.
While this has frustrated some investors, it underscores the importance of regulatory compliance in financial markets.
For now, affected users must wait for issuers to meet these requirements or explore alternative investment options compliant with the new rules.
