A friend suggested an exciting company for me to invest in. I tried to trade the stock on Fidelity, and it was flagged as “Reg S.” As a result, Fidelity wouldn’t let me invest in the security.
(146822) Securities flagged as Reg S cannot be traded through this electronic channel. Please review your order or call a Fidelity representative for assistance at 1-800-544-2976.
Understanding “Reg S”
I was confused, so I did some research on Reg S. It turns out that Reg S is a regulation that exempts certain securities offerings from the registration requirements of the Securities Act of 1933.
This means that companies can offer and sell these securities to non-US residents without having to register them with the Securities and Exchange Commission (SEC). However, Reg S also restricts the resale of these securities to U.S residents.
Why Can’t I Trade Reg S Securities on Fidelity?
It’s because Fidelity is a US-based brokerage firm, and it is subject to U.S securities laws. Fidelity cannot enable the trading of Reg S securities to US residents.
If you are a U.S resident and want to trade Reg S securities, you will need to find a brokerage firm willing to facilitate the trade.
My Personal Experience
Since the incident, I have not dabbled in trading Reg S securities due to the associated risks that make me uneasy.
Instead, I find comfort in trading US-registered securities. They offer more information about the companies and their securities, along with better liquidity.