How European Union And UK Residents Can Invest in the ARK ETFs

Skip below for the ‘Solutions’ sections if you want to skip some of the inner workings of the story. Every member has their own specific situation, but we’ll try to cover this as comprehensive as possible for most people.

First of all, before I lay out the ways it can be done, we should know why it is not that straightforward.

Short answer: regulation. Specifically MiFID and PRIIP, which aims to protect EU retail investors in various from certain financial instruments. US ETFs (of all kinds, not just ARK) are an issue in the eye of the regulation.

All ARK ETFs are listed on US Exchanges. Three of the actively managed ETFs (ARKF, ARKK, ARKW) are listed on NYSE. The index ETFs (PRNT, IZRL) and the other two actively managed ETFs (ARKQ & ARKG) are listed on the CBOE BZX Exchange.

It is not just the regulation per se, but also ARK has to come with the helping hand. Below their answer as I did write them:

"ARK is aware of the new EU requirements. Currently, we do not have a KIID for our US-registered ETFs, however, we are working with outside counsel to analyze European regulation. We will update you when we’ve come to a resolution. We are sorry for the inconvenience and hope to provide more clarity to European investors in the future. We currently cannot provide a timeline."

Initially, I thought there is just a 2 pages document missing, the so called "KIID" that describes the nature and risks of the ETF, though if it was just that, I am quite sure Ark would have solved that fast. Seems to be more than that.

Now to the juicy part, how can one still invest in Ark funds.

1. Ask your broker to upgrade you from a Retail to Professional account. If you qualify it should work smoothly in 24-48 hours. Many people just did this and it worked (I only know for sure with Interactive Brokers). I heard some people who did not qualify, but they still got the upgrade with various brokers as it seems checks are not always enforced. If one goes that route and doesn’t actually qualify, but gets accepted anyway, you should clearly understand what the implication of that is. I would guess the burden is on the broker to get a fine, less on the investor but do your own due diligence. I would especially ask if there is a difference in terms of the Investor Protection act, there might be different coverage between the two. Actually I am quite sure there is a difference, but those are legal aspects and definitely not my specialty.
2. Find an online broker or a bank which allows you to do it via their platform/online banking be it you are a Retail Investor or Professional. Some members of our community mentioned that it worked normally for them and that they were surprised some could not despite being residents of the same country. It seems that some online brokers are registered in other jurisdictions which are fine with US ETFs and can offer in the same time their services to EU residents. That is strange to me, a clear red flag. Or don't ask anything, but ride it as it is while taking responsibility for the decision. There are also brokers registered in the EU which allow clients to invest and I suspect they just did not care about the regulation: do business with the clients while risking a fine. Therefore, I would do some due diligence on the broker: is it regulated, what is the rationale in terms of their clients being able to invest in US ETFs while the others can’t?
3. If those 2 ways do not work, you can invest with options. It works independent of the investor classification: Retail or Professional. I have to say that is really strange and funny: the regulation stops one to buy the simple Ark long-only equity ETF, but with options there is no stop sign despite options being riskier and needing more financial acumen to get a clear picture of the exposure and risk in the given instrument at any point in time. Strange regulation, regulation loopholes, brokers not following the rules, I don’t know, but it makes no sense to me to allow options but not the basic 1:1 exposure.
4. You can invest in ARK ETFs if you are a client of the private banking division of a bank. It should be enough to call your representative and tell them to buy Ark ETFs. Unfortunately, not many people can be private banking clients, or they can but find their fees not worth it (helps a lot in IPOs though).

I hope all this helps: it would give you a good start on which route you could go. As always, similar like with investments, this is not financial/legal advice, broker recommendation etc, do your own due diligence which is right for your personal circumstances and particular jurisdiction. This article should at least save you time in the process: ask the broker key questions, look for potential red flags so that you are safe.

Please post here your experiences, the online brokers you found that worked and your opinion about them. Same if you found other ways and what was your experience. This would help the community: current and future folks.

Nonetheless, once Ark works out the regulations it should be possible for all without a big hassle.

Cheers! :)

P.S. if you want to more know about the regulations, below the links via IBKR, for more I would go to the official regulation: MiFID, PRIIPs