Across the pond

By THIS IS MONEY
Updated:

 

As a UK citizen, how do I buy shares in US listed companies without opening an account in the US? P.D., London

Richard Hunter from NatWest Stockbrokers says: Most UK brokers have the facility to trade in US stocks - indeed, trading in US stocks as a UK citizen is becoming easier and cheaper. There is no stamp duty on US share purchases and spreads (the difference between the price at which you buy and sell shares) tend to be much smaller.

But Private client brokerage charges are much higher for dealing in US shares than in UK shares. CREST, the UK-based real-time securities settlement system, together with The Depository Trust Company (DTC), the US securities settlement system, have announced a link which is planned to go live in March this year. It should significantly reduce the cost by providing access to DTC through CREST connections.

Investing abroad is not for beginners. Most brokers will want you to deposit money before you start investing (there are exceptions) and you will be taking a currency risk. You need to change your money into US dollars and this leaves you open to the danger that any appreciation in the value of your investment could be more than wiped out by an adverse movement in the sterling/dollar exchange rate. Most brokers will offer a currency conversion to settle trades against sterling. But some new Internet brokers offering on-line trading require a US dollar account and a substantial deposit before trading.

Whether you deal through a US brokerage or a UK broker offering trading in the US market, make sure you have filled in a W-8 form, which identifies you to the US Internal Revenue Service as a non-US resident and exempt from paying US taxes.

Most watched Money videos