No Trading Permissions To Buy Stocks In IBKR

One common problem in IBKR is that you can find stocks you want but encountered a permission error that when trying to buy the stocks.

Wonder why you have no trading permission to buy stocks? You did not select US stocks or select good or extensive knowledge of stocks when filling up your experiences and trading permissions. EU users has a tougher time and must provide Key Information Documents to trade US stocks.

Enabling Trading Permissions to Buy US Stocks

Luckily, IBKR provide a simple self-help solution in their app or website.

You just need to go to your Account Management > Trading Permissions to enable the required settings.

IBKR will take up to 48 working hours to update your permissions based on your selections. You also may be prompted to sign agreements or disclosures depending on the permission or program being requested. 

Under IBKR Trading requirements (for stocks and other trading instruments), 

1. To trade any product, you must have a Good or Extensive Knowledge Level for that product. In the case of Complex & Leveraged Products, you must have a Good or Extensive Knowledge Level for stocks and options, or stocks and futures, or take a test.
2. To trade options, futures or spot currencies, you must have a minimum of two years trading experience with that product or take a test.
3. To trade Bonds, if you are Hong Kong applicant, you must have a minimum of five years trading experience with that product or take a test.
4. To trade Complex & Leveraged Products, you must have a minimum of two years trading experience with stocks and either options or futures, or with stocks or options or futures and take a test. Note that UGMA and UTMA accounts are not eligible to trade this product type.
5. Your Net Worth cannot be less than your Liquid Net Worth.
6. To qualify for a Portfolio Margin account, your Net Worth and Liquid Net Worth must each be greater than 100,000 USD.

FYI, for options, you must do the quiz, with unlimited attempts which I had to do several times.

Another requirements is to ensure your investment objectives:-

• On Cash Account 
• Liquid Net Worth/Income above 20,000
• Aged above 18
• Investment objectives of "Income", "Growth", "Trading Profits", "Speculation" or Hedging"
• Margin Account (I am using this)
• Liquid Net Worth/Income above 20,000
• Investment objectives of "Growth", "Trading Profits", "Speculation" or Hedging"
• Portfolio Margin Account
• Liquid Net Worth/Income above 100,000
• Investment objectives of "Trading Profits" or "Speculation"

Options Trading Limitation

If you selected limited experience in option trading, there is also a limited option trading mode. Limited option trading lets you trade the most option strategies but requiring cash for more riskier option trades:

• Long Call or Put
• Covered Calls
• Short Naked Put: Only if covered by cash
• Call Spread: Only European-style cash-settled
• Put Spread: Only European-style cash-settled
• Long Butterfly: Only European-style cash settled
• Iron Condor: Only European-style cash settled
• Long Call and Put

EU Investors Cannot Buy US Stocks

I learnt about this through Reddit as I am not a EU users.

Due to the 2008 financial crisis in Europe, the European Commission increased consumer protection requirements by brokerage to rebuild confidence in financial markets.

The Regulation is an investor protection legislation, the main objectives are:

• To ensure the understanding and the comparability between similar products in order to help the investor make investment decisions.
• Improve transparency and increase confidence in the retail investment market.
• Promote a single European insurance market.

Under Packaged Retail and Insurance-based Investment Products Regulation (PRIIPs Regulation), IBKR must gather the Key Information Documents (KIDs) from you before allowing any trades.

The KID is a 3-page document that contains important details of the product including general description, cost, risk reward profile and possible performance scenarios.

The other options is to buy EU-domiciled stocks/ETFs, which is indicated (if in no other way) by the first two letters of the ISIN (IE for Ireland, LX for Luxembourg and so on). This means that the tracker, which owns the investments on your behalf, is an EU company.

• VTSMX instead of VTI
• VEIEC instead of SPEM

A newbie tip is to remember converting your currency to USD if you deposit non-USD after trading. If not, you will probably faced a negative MTD interest issues like me eventually.