CEDEARs or an account abroad: how to trade US stocks from Argentina

Anyone residing in Argentina who wants to trade US stocks has two paths: buying CEDEARs on the local exchange or opening an account with a broker abroad. Neither is "the right one"; each serves different purposes. This guide compares the two honestly, point by point, without recommending any broker and without earning a commission for referring anyone.

What a CEDEAR is

A CEDEAR (Certificado de Depósito Argentino) is a certificate that trades on the Argentine exchange and represents a fraction of a stock or ETF listed in the US. The underlying shares are held in custody abroad; the certificate is bought in pesos or in MEP dollars, in a local brokerage account, like any Argentine stock.

A central detail is the ratio: each CEDEAR equals a fraction of the original share. Ratios vary widely by instrument, from 1 to 1 up to several dozen certificates per share. To compare prices, the dollar price of the stock is divided by the ratio and multiplied by the implied exchange rate.

Trading hours

The US market trades from 9:30 am to 4:00 pm New York time. In Argentina that corresponds to 10:30 am to 5:00 pm when daylight saving time is in force in the United States (March to November) and 11:30 am to 6:00 pm the rest of the year.

CEDEARs trade during local exchange hours, usually 11:00 am to 5:00 pm Argentine time (the current schedule should be verified). Two consequences:

• For part of the year, the CEDEAR opens before the stock does in New York: during that half hour the price forms without a live reference.
• The last hour in New York, during the northern hemisphere winter, falls outside local hours.

If you follow a system that executes at the New York open, with CEDEARs you will not be able to do so exactly: execution will be later or earlier, at a different price. With an account abroad, the order enters the opening auction like any other.

Currency

With an account abroad, trading is in dollars: purchases are in dollars, sales are in dollars, and the result is in dollars.

With CEDEARs, the peso price is the stock price multiplied by the implied dollar (the "contado con liquidación" or CCL rate) and divided by the ratio. This means the CEDEAR moves for two reasons: because the stock moved and because the dollar moved. On a day when the stock rises 1% and the CCL falls 2%, the CEDEAR falls. If the result is measured in MEP dollars, the gap between MEP and CCL adds further noise.

That is neither good nor bad: for someone who wants to dollarize and have stock exposure at the same time, it is exactly what they are looking for. But if what you want is to replicate a system measured in dollars, the CEDEAR adds a variable the system does not control.

What can be traded

Thousands of stocks and ETFs are listed in the US. CEDEARs cover a list of a few hundred, concentrated in the largest companies and, for a few years now, some ETFs. If the system being followed uses a broad universe, part of its signals will not have a CEDEAR, and a system missing signals is not the same system.

With an account abroad, everything listed in the US can be traded, including fractional shares at many brokers.

Liquidity and spread

CEDEAR liquidity is concentrated in a small group of well-known names; in the rest, volume is low and the spread (the distance between bid and ask) can exceed one percent. A market order in a thinly traded CEDEAR can cost much more than the same order in New York, where large stocks have spreads of cents.

For trading with market orders this is decisive: the execution cost of an end of day system depends on the spread, and in illiquid CEDEARs that cost can absorb the entire edge.

Costs

With CEDEARs, the local broker's commission plus market fees are paid, and sometimes a custody fee. The percentages vary by broker. In exchange, there is no cost for wiring money abroad, and it is possible to start with small amounts thanks to the ratios.

With an account abroad, per-trade commissions are low or zero at many brokers, but dollars must be transferred into the account: the international wire has a fixed cost (tens of dollars per transfer, depending on the bank), takes days and requires a declared source of funds. For small amounts, that fixed cost is significant; for a US$10,000 to US$50,000 account, it is diluted.

Taxes and paperwork

Both paths have tax implications in Argentina, different from each other, and the rules change. How to declare an account abroad, how to transfer funds and what taxes each trade pays is a matter for an accountant; this guide deliberately does not cover it. Nothing in this guide is a recommendation: it is not financial or tax advice.

Which one, then?

• If you want to dollarize savings with exposure to large stocks, with small amounts and without taking money out of the country: CEDEARs.
• If you want to follow a system measured in dollars, with execution at the New York open and access to the whole universe: an account abroad.
• If you are in between: it is worth measuring how many of the signals you plan to follow have a liquid CEDEAR. Even if many do, with CEDEARs execution will be at a different time, in a different currency and without part of the universe: it is not the same system, and there is no backtest of that version. To follow a system like Ecliptic Alerts as it was measured, an account abroad is required.

Ecliptic Alerts sends the same signals to every subscriber, computed with the New York close for execution at the next open; it works with any broker that trades US stocks. How to open an account abroad from Argentina, step by step, is left for a separate guide.

An example day shows what a real signal looks like before any decision is made: https://eclipticalerts.com/?demo=1