Difference between CFD and FND, and why can't I buy FND?

[Philips]

So I live in Europe and informed Saxo accordingly. Now I can't buy several close ended funds, because the companies didn't bother dealing with all the EU bureaucracy.

One the funds I can't buy is PCN (PIMCO Corporate & Income Strategy Fund): I can't buy it as a FND (ISIN US72200U1007), but I can buy it as a CFD (same ISIN).

PCN and CFD refers to the code before PCN, in the Saxo platform.

I don't really understand what is the difference between the two, and why I can't buy one and not the other. It is some problem with the Saxo website? The ISIN and price is the same.

Same issue with BBN (Black rock municipal bonds), I can buy as a CFD but cannot as a FND. Some other CEFs I can't buy both CFD and FND.

[shri]

So you are able to buy say VOO but not PCN through saxo EU? Odd because technically they are just regularly traded stocks. Should not be an issue about registering with regulators.

[Sith]

Europe has put in place some regulations a few years ago, where you can only buy a fund if the documents are in the same language as the country they are sold in, if not available then they are not allowed to sell it in that country. It's a headache for most people in Europe as most funds don't bother to translate their documents in all those different languages.

It actually has the opposite outcome of what they try to achieve (make sure people understand what they are buying) as now a lot of people circumventing the rules by buying Options on those funds which is obviously more technical than buying directly into the funds.

[Philips]

Europe has put in place some regulations a few years ago, where you can only buy a fund if the documents are in the same language as the country they are sold in, if not available then they are not allowed to sell it in that country. It's a headache for most people in Europe as most funds don't bother to translate their documents in all those different languages.

It actually has the opposite outcome of what they try to achieve (make sure people understand what they are buying) as now a lot of people circumventing the rules by buying Options on those funds which is obviously more technical than buying directly into the funds.

Thank you. So the problem is simply that my address is in Italy, and the documents are in English? This is bloody stupid!

[Sith]

Thank you. So the problem is simply that my address is in Italy, and the documents are in English? This is bloody stupid!

Correct

[ndt]

On a side note, have you considered/checked if Saxo or any other platform handles WHT refund properly!! Many PIMCO CEFs regularly refunds portion of WHT after year end filling. Sometimes low cost platforms (not saying Saxo EU is one of them) does not handle it properly and make investor penny wise dollar foolish..

[shri]

Europe has put in place some regulations a few years ago, where you can only buy a fund if the documents are in the same language as the country they are sold in, if not available then they are not allowed to sell it in that country. It's a headache for most people in Europe as most funds don't bother to translate their documents in all those different languages.

So, from what you're saying - any US listed exchange traded fund is disallowed in the EU if their prospectus or fact sheet is not available in the native language of the country that it the investor is in?

PCN a NYSE listed exchange traded fund (not an open ended ETF .. but a Closed End Fund - CEF)?

You've got my full attention ... this is an area I am very unfamiliar with in terms of EU regulations.

Chatting with a rando from Geo .. was told there is a small chance it might be related to outdated W8BENs or tax issues. He does not have a Saxo acct to test this unfortunately.

[shri]

@ndt - if I remember correctly Saxo has segregated client accounts held at Citi and does handle WHT well enough (tested on a Blackrock CEF). No clue again how it works in the EU with their tax regulations / treaties etc.

[Sith]

So, from what you're saying - any US listed exchange traded fund is disallowed in the EU if their prospectus or fact sheet is not available in the native language of the country that it the investor is in?

PCN a NYSE listed exchange traded fund (not an open ended ETF .. but a Closed End Fund - CEF)?

You've got my full attention ... this is an area I am very unfamiliar with in terms of EU regulations.

Chatting with a rando from Geo .. was told there is a small chance it might be related to outdated W8BENs or tax issues. He does not have a Saxo acct to test this unfortunately.

No not tax or W8BEN related.
It’s the UCITS Directive issued by the ESMA and has to do with PRIIP/MIFID.
Basically it’s the KIID that needs to be in the official language. Most US funds/ETFs don’t bother to follow the UCITS directive as they are focused on the US market anyway.

Btw each country in the EU can decide if they approve an additional language (next to their official language(s))
So it also depends on which country you are registered in.

[freeier]

CFD is a derivative contract you will have with Saxo if you execute it. In the event Saxo goes belly up your gains in any CFD you have with Saxo will become a unsecured credit you have of the company. I guess Saxo is running some gaps there and sells you the fund via CFD (where the actual buying/selling of the ETF is carried out by the bank, and not directly under your name).