# TD Waterhouse charges 2.8% for DRIP of US$ RRSP holdings



## mrPPincer (Nov 21, 2011)

I recently heard TDW charges hidden double currency conversion fees to drip stocks traded in US dollars inside registered accounts so I took a look at my latest dividends.
(This was inside my RRSP but I assume it works the same way with a TFSA or RESP at TDW).

Here's my numbers;

325 US$ in dividends
219 US$ stated cost of dripped shares

106 US$ is what should have been left over and converted to CDN$ before double currency conversion fees are considered, right?

106 X 0.9645 (TDW's cost to convert to CAD) 
= $102 CDN
Actual dollars left in my account after the drip was $96 CDN

$102-$96= $6

So six bucks is what it cost me to let TDW drip my US holdings that day.

219 X 0.9645 would have been $211 CDN more in my account if I had not dripped.

$6 divided by $211 = 2.8% 

So TDW is charging me 2.8% *more* to drip those shares than if I would just let them ding me just once and convert 100% of the dividends to Canadian dollars!

I didn't want TDW to do *any* currency conversion for me at what they charge, but until they get their trading software fixed my only other alternative would be to go elsewhere, and who's to say there won't be issues with the next discount brokerage I try. :upset:


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## GoldStone (Mar 6, 2011)

$6 divided by $211 overestimates the charges.

You received 325 US$ in dividends. They converted the entire amount to CAD (and charged you forex fee to do it):

325 x 0.9645 = $313 CAD

They converted $211 CAD back to USD to drip shares (and charged you another forex fee to do it).

Your total cost was $6. It covers both conversions.

Average amount converted: (313 + 211) / 2 = $262 CAD

$6 / $262 = 2.29%

Still outrageous. We discussed this issue before, many times. I don't DRIP my US shares in TDW RRSP, so I only pay one forex fee.



> who's to say there won't be issues with the next discount brokerage I try.


Use a broker who offers USD RRSP accounts. For example, RBCDI. There should be no issues with conversions.


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## slacker (Mar 8, 2010)

That's the reason why I switched out of TDWH. Not only are they so antiquated that they failed to provide USD RRSP accounts, they're also charging you a fee for dripping in USD. They're great with everything else though.


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## mrPPincer (Nov 21, 2011)

GoldStone said:


> Your total cost was $6. It covers both conversions.


I don't think so...The first cost was in their exchange rate of 0.9645, when according to globeinvestor.com, the exchange rate closed at 0.9832.

So right there I did lose about 6 dollars on the initial $325 conversion, or 1.9%
I received $313 instead of $319.

Then, when they converted back the money they needed to make the 219 US$ they took 313-96= $217 CDN.
Dividends @ $219 X 0.9832 = $215 CDN, so another 2 bucks there, this is confusing.

Still getting ripped off no matter which way I look at it.

edit: correction: (0.9832 - 0.9645) divided by 0.9832 = 1.9%, not 1.87%


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## humble_pie (Jun 7, 2009)

pincer, goldstone is right. Do not ever drip US dividends in tdw rrsp or any other broker - cibc for example - that does not have a true USD rrsp.

brokers w true USD rrsp: bmo, ry, apparently questrade.

brokers w out: everybody else.

btw part of what tdw charged you when they FX'd you twice on the dividend was the normal, fair, wholesale USD/CAD exchange rate. Everybody has to pay this.

what is worth avoiding, whenever possible, is the FX fee that brokers charge on top of the wholesale exchange rate. In large measure this FX fee is imposed by their related bank.

it's plain by now that tdw has raised its FX rate considerably in recent years, especially on smaller amounts such as US dividends. The rate used to be (1.90%/2) for a one-way trip. It's now (3%/2) one-way.

the big green didn't increase commissions. Instead it sought more revenue $$ in FX transactions that are more concealed ...

another place to prevent FX on dividends in non-registered accounts is preventing FX on *canadian* dividends that happen to be dividends paid initially in US dollars. There are easily 20 or more big canadian companies that issue dividends in USD only. Brokers including bmo, ry etc will charge FX fees on these dividends when these stocks are kept in canadian accounts. The solution is to keep these stocks in US accounts. 

this point has also been discussed numerous times in cmf forum. Here's an excellent recent article about this issue on Canadian Capitalist blog. Article includes a working list of such companies.

http://www.canadiancapitalist.com/canadian-stocks-paying-us-dollar-dividends/


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## mrPPincer (Nov 21, 2011)

I've been poring over CMF posts for almost a year now and I don't know how I missed this one until fairly recently, but I thought I'd bring this issue up front and center again now that I have concrete numbers.

With luck maybe it will have some small influence on how soon or if TDW will fix their software to address this problem (not holding my breath).
Aside from this one issue I like dealing with TDW.

If globeinvestor.com's spot rate for the dollar on Sept 28 is correct, then TDW is actually charging me *1.9% for the one way trip to CDN$ and then more for the ride back.*

And yes I will definitely cancel US$ DRIPs for the RSP. 
I assume the same thing would happen in my TDW TFSA?

edit: never mind, dumb question, of course they do.


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## GoldStone (Mar 6, 2011)

TFSA is the worst place to hold your US equities anyway. TFSAs are not exempt from 15% US withholding tax, unlike RRSPs. You have no way to recover the tax.


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## GoldStone (Mar 6, 2011)

You received $325 USD in dividends.

$219 USD got reinvested.

You were supposed to get $325 - $219 = $106 USD cash, converted to CAD.

Assuming the spot rate is 0.9832 as per globeinvestor.com:

You were supposed to get $106 * 0.9832 = $104.22 CAD

You got $96.

The amount you lost: $104.22 - $96 = $8.22 CAD

The amount you lost in USD: $8.22 / 0.9832 = *$8.36 USD*

$8.36 / $325 = 0.0257 or *2.57%*

That's what they charged you for two-way conversion. 1.285% each way.


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## humble_pie (Jun 7, 2009)

the big green would be charging a rate that is a combination of basic exchange rate plus their FX fee.

no one can escape the basic foreign exchange rate. It's what the giant global moneycentre banks are paying each other. The mid-point in moneycentre transactions is what XE.com reports every minute. It's what the bank of canada reports as first the noon rate & subsequently the closing rate. We will all pay those rates.

in addition, there are FX fees imposed on clients by every financial institution. Both the underlying FX rate & the FX fee are combined into one figure, the so-called exchange rate that is quoted/charged to clients. This is what you are seeing. 

to get a picture of the pure FX fee that tdw or any broker is charging, ask for both their buy & sell rates for the same amount at the same time. For a small amount under 10,000, tdw rates should be about 3% apart, perhaps a farthing less.

it's the FX *fee* that investors can sometimes work around or teach each other how to avoid or mitigate. There's a lot of such smart teaching in the form of tips & examples here in cmf forum. Gambitting plus how-to-manage-your-FXed-dividends are 2 issues that are well taught here.

but the basic moneycentre FX rate is a fact of life. BTW i have no idea what globeinvestor displays, but they should be taking their figs either from the bank of canada or else from XE.com.


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## GoldStone (Mar 6, 2011)

Sure, 2.57% (or whatever) includes TDW forex costs + TDW vig.

From investor's point of view, it's the total that matters. How far are you from the spot rate.


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## Uranium101 (Nov 18, 2011)

What do TDW have that other brokers don't got?
BMO and RBC both offers USD in registered accounts.
DRIPing in USD won't be a problem at all.


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## CanadianCapitalist (Mar 31, 2009)

GoldStone said:


> $8.36 / $325 = 0.0257 or *2.57%*
> 
> That's what they charged you for two-way conversion. 1.285% each way.


I don't think this estimate is quite correct. That's because the original dividend of USD$325 was converted once. Only the reinvested amount of USD$219 was converted again. If you blend the two, you'll get a lower rate on the twin conversions.

Conversion 1:
USD Dividend: US$325
CAD Dividend at TDW's conversion rate of 0.9645 = C$313.46

Conversion 2:
Reinvested US Dollars: US$219
Reinvestment in CAD: C$211.22
Amount left over: C$96
Total: $307.22

Cost of Dripping = $6.23 or 2.95%

Or, try conversion 2 this way:
Reinvested US Dollars = US$219
Reinvested US Dollars in CAD at a rate of 0.9945 (assuming a 3 cent spread) = C$217.80
C$ left over from step 1: $95.66


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## mrPPincer (Nov 21, 2011)

Two reasons why TD Waterhouse are getting away with this
1. the numbers are hard to find and the math can be tricky
2. inertia, people just don't like to go through the hassle of changing brokers.

I paid for this little lesson with real money so I'll run through the numbers one more time here for precision and mental exercise if nothing else..

0.9832 spot rate closing on sept.28/2012 as per bank of canada
BOC closing rates link here.. http://www.bankofcanada.ca/rates/exchange/us-can-summary/

spot rate minus TDW echange rate to buy Canadian dollars was 0.0187
0.9832 - 0.9645 = 0.0187

US dollar dividends received multiplied by the spread equals the echange fee paid to TD Waterhouse for the first unwanted conversion.
$324.67 X 0.0187 = 6.071329 in US$

Fee paid divided by total dividends equals percentage paid for the one way trip
6.07 / 324.67 = 1.87% .. (I should stop second-guessing myself) 1.87% for the first conversion

___________

Next, conversion fee for trip back to US dollars (we'll value this amount in US$ using BoC spot rate for simplicity's sake in the next calculation)
For part 2, the trip back, (the stated cost of the full share drips) plus (hidden fees for the second unwanted conversion) is (DRIPs+2nd fee)

(DRIPs+2nd fee valued in CDN$) equals (CDN$ missing after first conversion @ TDW exchange rate)
(DRIPs+2nd fee valued in US$) equals (CDN$ missing after first conversion @ TDW exchange rate) divided by (BoC spot rate at closing)

(DRIPs+2nd fee in CDN$) equals 
(US$ dividend after conversion to CDN$ at TDW exchange rate) minus (actual canadian dollars present)
(324.67 X 0.9645) - 96.50 = 
313.144 - 96.50 = $216.644

(DRIPs+2nd fee valued in US$) equals
216.644 / 0.9832 = 220.35 US$

Finally, the second unwanted, hidden TD Waterhouse conversion fee equals (DRIPs+2nd fee valued in US dollars) minus (stated cost of the drips in US$) which equals
220.35 - 218.57 = 1.78 US$

This is a conversion fee on money that has already been hit with a conversion fee, so to get an accurate percentage on the original dividend we need to factor that in, so..

The 2nd fee valued in US$ divided by [(DRIPs+2nd fee valued in US$) minus (first commish on the portion doing the return trip)] equals the rate on original portion in US$ of the original dividend doing the hidden second part of the unwanted, hidden TD Waterhouse round trip.
1.78 / [(220.35) - (220.35 x .0187) = 0.8232 %

In CDN$ at spot rate,

Cost of round trip for the US$ amount that went full circle = $6.15 CDN in TDW pocket or (1.87% + 0.8232) = *2.6932 % of the original portion of dividends that payed for full share drip* along with costs
Cost of one-way trip for the CDN$ left in my account = $1.84 CDN left in TWH pocket or *1.87% of the original leftover portion* that could not drip a full share

Total of about 8 bucks CDN or 8.13 US dollars using these more precise numbers for this little money shuffle (did I mention unwanted?) by TD Waterhouse.

Did I lose anyone yet? :smilet-digitalpoint
Please don't tell me I have the numbers wrong, as fun as it was, I really, really do not want to go through them a fourth time :hororr: :nightmare:


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## mrPPincer (Nov 21, 2011)

I had this window open so long that I missed CC's post.
The numbers look horrifying no matter how you look at them but I think my latest run-through will stand up to scrutiny.
Gonna put an ice-pack on my tired brain now


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## humble_pie (Jun 7, 2009)

pincer i tend to believe there is little to be gained now by fretting & re-fretting the numbers. The bottom line is that the big green shamelessly zapped you & every other client who is dripping US dividends into rrsps, not once, but twice.

they did this without explanation or notice. As a matter of fact, many if not most of their frontline representatives still don't know how to handle questions on this issue.

this treatment only happened to me for a couple of dividends in 2011. I had been told that dripped dividends would totally eliminate an FX fee but as soon as i observed that this was not the case, i switched rrsp dividends back to cash again.

if i had an extensive history of double FX fees on dripped US dividends in rrsp, i would probably summarize these & seek reparations from the broker. I would expect restitution of all dollars ever paid as 2nd FX fees on such dripped dividends (ie the fees going from the CAD amounts to the USD purchased cost of the market drip dividends.) As a practical point, i would expect a broker to offer reparations, not in cash, but rather as commission credits for the future.

if anyone from another broker happens to be reading this thread, please note that the double FX fee in dripped US dividends is likely to be found at all brokers save those who offer 100% authentic USD rrsps. There are at least 3 of these, BMO, roybank & questrade. However, the BMO USD rrsp only debuted in september 2011, i believe, so it is possible that all US dripped dividends at BMO prior to that date were charged a double FX fee.


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## Antlese (Jul 14, 2012)

This has been a very enlightening thread on a subject that I have ignored until now. Most of my USD dividend stocks are with TD Waterhouse. Perhaps it might be time to think about moving my TD accounts to BMO. Thanks to everyone up thread who contributed to this.


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## GoldStone (Mar 6, 2011)

Antlese, here's how I look at it.

30% of my portfolio is invested in US-listed ETFs. They yield 2.165% on average. I don't drip them to avoid double conversion. TDW dings me once. Let's say they charge me 1.9% (mrPPincer calculated 1.87% two posts above).

My annual loss to forced conversion:

0.3 * 0.02165 * 0.019 = 0.000123405 or 0.012%

I don't like it one bit. But, is it painful enough to send me packing? Probably not. I do all my banking with TD. It's very convenient to have all family accounts under one roof. That convenience is worth something.


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## avrex (Nov 14, 2010)

GoldStone said:


> 0.3 * 0.02165 * 0.019 = 0.000123405 or 0.012%.


That's a very good way to look at it @GoldStone. In other words, it's like TD is charging an additional MER of 0.01 against your portfolio.

In the big picture, it's really not too much to worry about.


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## cedebe (Feb 1, 2012)

Thanks for starting this topic, OP. I, too, am with TDWH and recently activated drips for my Vanguard US$ ETFs as it seemed better than having the money sit as cash. I'll follow up with TDWH tomorrow to enquire about the exchange rates and switch back to cash as necessary. Still trying to wrap my head around this new info...


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## mrPPincer (Nov 21, 2011)

You are very welcome cedebe, I think there's a lot of people out there totally unaware of this little money-grab.
TD Waterhouse, with zero risk and no money on the table, is essentially stealing the equivalent of a dividend payment out of *our* dividends.


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## humble_pie (Jun 7, 2009)

one should keep in mind that this thread is only about US dividends being dripped into registered accounts, particularly into rrsps. It's not about non-registered accounts.

in non-registered accounts, tdw offers cash & margin accounts that are strictly separated by currency. Since i also have backup accounts at bmo, for my part i find the clearcut CAD/USD differentiation at tdw to be very helpful.

could i point out also that it is likely that *every* broker that does not offer a distinct USD rrsp - in other words the majority of brokers - is probably charging the double FX fee. So it seems unfair to single out tdw as if it were the sole practitioner.

a client with a long history of substantial dividends would have a good chance of getting his extra FX fees returned to him in some acceptable form, i would imagine. For other clients, the amounts involved in the past may have been too small to worry about. 

(aside to pincer) it is possible that tdw does not even know what is going on. This would be particularly true if the US dripped dividend architecture for rrsps is shared by a number of brokerages. In other words, perhaps they all convert to CAD & then back again to USD to buy the dividend drips using similar software. Perhaps - just speculating here - the system was first developed for the national association of securities administrators here in canada ...


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## mrPPincer (Nov 21, 2011)

I seriously doubt that TDW head office is unaware of this problem, possibly only bringing it out into the light will have any chance of having it repaired in anything like the near future.
I don't care what the other brokers that are not BMO, roybank & questrade are doing, this is about what my broker, TD Waterhouse is doing.
With the assistance of a little public scrutiny, maybe TD Waterhouse will fix this and stop the money-grab out of our dividends.

Isn't that *why* we investors are holding stocks in the first place?
For the dividends?

If a stock never ever will pay dividends we'd be pretty dumb to hold them wouldn't we?
Some poor sucker would be left holding the bag at some point.

HP you mentioned in another thread something in the lines of that TDW was looking into going with a new trading platform.
I think everyone who is aware of this _glitch_ in their system, which no doubt brings in considerable revenue *at our expense*, would like to see it fixed conclusively.


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## CanadianCapitalist (Mar 31, 2009)

GoldStone said:


> I don't like it one bit. But, is it painful enough to send me packing? Probably not. I do all my banking with TD. It's very convenient to have all family accounts under one roof. That convenience is worth something.


+1. It is possible to estimate TDW's currency charge from the spread in mrPPincer's post.

Sell rate = 0.9645
Buy rate = 0.9912

One way exchange rate = 1.4%.

About 40% is hit by TD's currency conversion on US dividends. 

0.4 * .0255 * .014 = 1.4 bps. That's not enough for me to go through the hassle of moving elsewhere because I like the convenience factor of having everything in one place.


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## CanadianCapitalist (Mar 31, 2009)

mrPPincer said:


> With the assistance of a little public scrutiny, maybe TD Waterhouse will fix this and stop the money-grab out of our dividends.


I had planned this post for a while. Thanks for supplying the numbers mrPPincer!

http://www.canadiancapitalist.com/double-dipping-on-currency-conversions-in-us-dollar-rrsp-drips/


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## Eclectic12 (Oct 20, 2010)

mrPPincer said:


> ... I don't care what the other brokers that are not BMO, roybank & questrade are doing, this is about what my broker, TD Waterhouse is doing. With the assistance of a little public scrutiny, maybe TD Waterhouse will fix this and stop the money-grab out of our dividends.
> 
> Isn't that *why* we investors are holding stocks in the first place?
> For the dividends?
> ...



I get that you want TDW to change this, are hoping that your outrage will translate to other customers complaining and hopefully change in the future. What I don't get is why you apparently don't care about what other brokers are doing. 

If you eventually decide TDW, like the other brokers that are money-grabbing dividends this way, is not going to change - I'd have thought you'd want to know:
a) what other brokers do the same so that you avoided repeating the issue.
b) what other brokers avoid the issue.

After all - if the public scrutiny method result in the desired change, moving your accounts or setting up accounts for the US dividend/DRIP stocks may be the only solution.


As for "isn't it dumb to hold non-dividend paying stocks" - that's one point of view. 

Personally, it seems strange to see buying a non-dividend paying stock, holding it for four months and selling for a 90+% capital gain as a problem but to each their own.


IMO the bottom line is dividends are one of many reasons to buy stocks.


Cheers


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## humble_pie (Jun 7, 2009)

nearly everyone has known about the one-time FX fee for conversion of US dividends in tdw rrsps for some time now.

what is new is discovery of a 2nd FX conversion fee in drips - from CAD back to USD again in order to buy the dividends as US market drips. This has only recently been brought to light. CMF forum has probably scored once again as the first discussion group in canada to uncover this fact.

i still believe that all brokers other than the recognized 3 with USD rrsps are practicing the double FX on dripped US divs into registered accounts. I still believe that this may be due to a shared software. And i still believe that tdw, if asked, might refund the 2nd set of FX fees.

what i don't believe is that tdw is going to "fix" this software problem any time soon. They are devoting 110% of their resources right now to building the new USD rrsp, which will make such fixes redundant since the present system will disappear along with its FX fees. In the meantime i imagine it would be cheaper for the big green to refund clients who ask for reparations than to reduce their focus on the new build.


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## cedebe (Feb 1, 2012)

humble_pie said:


> <snip>They are devoting 110% of their resources right now to building the new USD rrsp, which will make such fixes redundant since the present system will disappear along with its FX fees. <snip>


Is there a target date for this? A quick Google search didn't turn up any info.


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## GoldStone (Mar 6, 2011)

humble_pie said:


> This has only recently been brought to light. CMF forum has probably scored once again as the first discussion group in canada to uncover this fact.


Good thing you inserted _"probably"_ in there.

Here is a thread. On FWF. That discusses this very subject. More than full 6 years ago.

The first post in the thread spells out the issue very clearly.

RRSP's, USD and dividend reinvestment

To OP: thanks for starting this thread. It's an obscure issue that needs to be brought to light every now and then.


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## My Own Advisor (Sep 24, 2012)

@GoldStone,

Agreed. BTW, called TDW tonight about another issue, they said "you should hear something more in 6 months." We'll see...


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## mrPPincer (Nov 21, 2011)

CanadianCapitalist said:


> I had planned this post for a while. Thanks for supplying the numbers mrPPincer!
> 
> http://www.canadiancapitalist.com/double-dipping-on-currency-conversions-in-us-dollar-rrsp-drips/


Yay I'm famous 
Thanks for doing the write-up on this subject on your blog CC!

Eclectic, I shouldn't have phased it in that way; ofc I would like to see no conversion charges across the board for US drips at all the brokerages, but I would like to see TDW be a leader here because it affects me directly unless I change brokers.
As to my comment about non-dividend paying stocks, I meant it in the context of being an investor holding long term, not as a trader.
I fully understand that money can be made by trading non-dividend paying stocks (I just don't have the knowledge, skill-sets or desire to try that yet).

HP, if TDW is building a new USD RSP, then I think it's fair to say the end result will likely be far better than yet another software "fix", so I could have pick better phrasing there as well.

update; cancelled drips in the RSP today and asked if all US$ shares are market dripped as mine were, and he said that most are (and are therefore more onerous) but there are a very few that are treasury drips. (Unlike CDN$ traded shares, where treasury drips are much more common).
I did not think to ask the obvious follow up question, which would be; 'Are those few US$ treasury drips exempt from the currency conversions?'


I


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## fersure (Apr 19, 2009)

While I am generally happy with TDW, I sent my letter off today highlighting my three concerns: 1) lack of commission-free etfs, especially DLR/DLR.U, 2) Lack of a US$ RRSP (and of increasing importance, $USD TFSA) 3) TDW's double currency conversion on synthetic DRIPs. I knew that the double conversion practice existed, but it wasn't until I saw it dollar terms how much this was costing me. Thank you for highlighting this issue and doing the math!


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## Assetologist (Apr 19, 2009)

I sent emails and spoke with customer service at CIBC Investor's Edge several times over the past few years about the lack of a USD RRSP account but finally transferred all our register accounts to RBC. I have been converting cash into the USD side recently. Even if CIBC finally wakes up and creates this option I will not be back. 
The only Shepherd to trust with your money is You!


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## TDCanada (Mar 17, 2011)

Hi there, we saw your post, and would like to provide some clarification. 

There are 2 types of DRIP, Treasury and Market. Treasury DRIPs are offered directly by the issuer. With Market DRIPs, income is received by TD Waterhouse on eligible securities. It is re-invested into additional shares by purchasing the security in the open market. TD Waterhouse offers the Market DRIP Program for securities that are not eligible for the Treasury Program. With the Market DRIP securities within an RSP/TFSA/RESP there is a conversion made to buy the shares in the open market. Only whole shares are purchased and any additional funds are then converted and entered as cash in the clients account

TD Waterhouse is currently working on offering US$ Registered accounts, but we currently have no timeline in place.


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## slacker (Mar 8, 2010)

I have switched to your competitors who has offered USD Registered Accounts for years.

In my opinion, TDCanada should not be charging extra fee for an antiquated system. Would you consider refunding all the extra and unnecessary foreign conversion fees you have charged in the past?


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## CanadianCapitalist (Mar 31, 2009)

TDCanada said:


> Hi there, we saw your post, and would like to provide some clarification.
> 
> With the Market DRIP securities within an RSP/TFSA/RESP there is a conversion made to buy the shares in the open market. Only whole shares are purchased and any additional funds are then converted and entered as cash in the clients account
> 
> TD Waterhouse is currently working on offering US$ Registered accounts, but we currently have no timeline in place.


Would TD Waterhouse provide some clarification as to why foreign exchange is charged twice on Market DRiPs? More importantly, you may also want to clarify where it is disclosed that TD Waterhouse charges double foreign currency conversions on Makret DRiPs. If not, why not? After all, when clients buy goods or service, they are entitled to know exactly what it is going to cost them.


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## Antoni (Mar 29, 2013)

*Caught in the act*

It seems that TDWH is not yet ready to accommodate US dividends in a RRSP without levying their fee for foreign conversion, even in the case of reinvested dividends, where this couversion, for the most part, does not happen. 

What would be the justification, anyway, to exchange US dollars for Canadian dollars, if these Canadian dollars have then to be converted back to US dollars, in order to reinvest them? 

In fact, though, the round trip does not happen. In the March statement, for a Vanguard ETF in a RRSP account, it is shown "Distribution $211.89" and "Reinvestment $214.82" (both amounts after conversion in Canadian dollars, it goes without saying). How is it possible to reinvest money that has not been distributed? The simple fact is that the amount received in US dollars is directly used to purchase new securities, so that the amount reinvested was probably something like 3 x US70.27 [closing price for the ETF on the day of the distribution] = US$210,81, an amount which is less than the amount distributed, US$212.00. If the transaction were in a non-registered US acccount, there would be US$1,19 left in the account after the redistribution. While, in the RRSP, they have to grab CAN$2,93 in my account.

It's only after the fact that the figures become awkward: a different rate is used for the conversion of the money received (0,9995) and for the back conversion to US dollars (1,019).

But the only money that has been effectively converted in CAN$ is the US$1.19, left after the reinvestment. The conversion of the amount redistributed is fictitious, nothing else than a levy of funds in the account Under the guise of a conversion that does not happen. 

How can such a practice be tolerated?


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## mrPPincer (Nov 21, 2011)

Antoni said:


> How can such a practice be tolerated?


I'm beginning to run out of patience.

The mythical true $US Registered accounts that TDW claim they are working on do not seem to be a priority.

Why should they make the change when they can continue to collect their *2-3%* toll on *every* $US dividend that passes through their antiquitated system? :upset::mad-new::neglected::hopelessness:

June 28, 2013, another reminder; they've pocketed another 2% just for a one-way trip (since I have cancelled all the Reg. $US market drips).

Known numbers, not from TDWH's system:
June 28 actual divys, $351.94 USD.
June 28 actual spot rate 1.0518.
351.94 X 1.0518 = 370.17 CAD 

TDWH's system says:
CONVERT TO CAD @ 1.03200 DIV Commission $0.00 Net Amount $363.21

TDWH pocketed $6.96 CAD or over *1.88%** for the *unwanted* and *unasked-for* one-way trip from USD to CAD.

*TDW is still pilfering 2% from EACH and EVERY Canadian who collects a $US dividend in a registered account, and close to 3% from market drips !!!*

Not only that, but they are deceptive about it; if I had not known, using outside sources, what my actual dividends were, as well as the actual spot rate for June 28 2013, I could easily read their system entry to be saying that the conversion is commission free, at spot rate, and that the posted amount is the actual dividends, which is not true.

How many Canadians are blithely and unknowingly being subjected to this underhanded theft by the big green and others, out of their hard-earned savings, for no better reason than 'we currently have no timeline in place' for the long promised, long awaited, in all likelyhood mythical, update to their antiquitated dos-based trading platform.

I'm tired of waiting.
Word was it was gonna be Q1 2013, well, that came and went, and Q2, now whispers are maybe late 2013? early 2014?
I call bullsh!t

it's time to start considering alternatives for my RIF.
I'd have to do that at some point in the distant future in any case because TDWH still charges an annual fee for RRIFs and RRSPs when they drop below the $25K level (another niggling annoyance about TDW which only serves to drive away the youth & anyone starting out an RSP and anyone winding down a RIF).

I'm also beginning to see less and less reason to be paying $9.99 a trade in my non-registered account, where the large bulk of my savings are.

TD Waterhouse when will you take true US$ Registered accounts off the back burner and *get it done* ???


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## m3s (Apr 3, 2010)

1) Take money elsewhere

2) Buy shares of TD and prosper

I'm surprised more people aren't outraged about this. I mean paying a few extra % in management fees is detrimental, let alone paying to convert money only to convert is back again :disillusionment::hopelessness::chargrined::stupid:


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## humble_pie (Jun 7, 2009)

m3s said:


> 1) Take money elsewhere
> 
> 2) Buy shares of TD and prosper
> 
> I'm surprised more people aren't outraged about this. I mean paying a few extra % in management fees is detrimental, let alone paying to convert money only to convert is back again :disillusionment::hopelessness::chargrined:



oh mode questrade is hitting you up for secret FX fees on your potash shares, although you refuse to believe it!

the other 2 brokers offering so-called USD rrsps - bmo & roybank - are similarly charging hidden FX fees on dividends from the 18 prominent canadian companies that pay their divs in USD.

recently a cmf member with a questrade rrsp posted proof that his barrick dividend was paid in CAD only, was hit up for FX fees ... by questrade ...

world is not a nice place.

ps i could show you how you could find out the truth about your blessed potash dividends, but the problem is that we've gone on & on about this for a long time already & you really don't seem to want to know each:


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## humble_pie (Jun 7, 2009)

PS there's been a lot of chat in cmf forum about *do not* take US DRIP dividends in rrsps at most brokers because the majority of brokers will double-dip FX fees on US drips.

the brokers include tdw, cibc, scotia itrade, natbank, hkbank & all other brokers - by far the majority of canadian brokers - who cannot offer USD rrsps because their legacy mainframe system is leased from IBM & it's turned out to be impossibly difficult to build canadian registered accounts on it.

it's not that these brokers are malingering, it's that they just plain cannot build a USD rrsp unless they change their legacy ISM mainframe. Which they don't want to do because it's still the best one around.

tdw keeps legitimately trying to develop rrsp workarounds. So far success has eluded them. I don't believe the other brokers on IBM's ISM system are even trying.

the consensus is black & white. Do. Not. DRIP. US. Dividends. Unless. It's. A. USD. RRSP. Broker. There are only 3 of these, maybe 4. All the rest are going to hit up US drips not once, but twice.

take cash divs instead. They'll only get FX'd once.


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## m3s (Apr 3, 2010)

humble_pie said:


> oh mode questrade is hitting you up for secret FX fees on your potash shares, although you refuse to believe it!


I don't see it as Questrade's fault if someone decides to hold a USD paying stock in a CAD account... Even if it was, I would actually convert that USD to CAD because I actually want CAD in my CAD account. If I buy it again (sold POT awhile ago) I will consider holding it in the account where I have the rest of my USD dividends

This is not the same as converting USD to CAD only to immediately convert it back to USD... TD should hire me if they can't figure out a patch for this simple programming problem of having FX fees reversed or refunded.... Computers are very fast today and nobody would notice such a workaround solution.... I'm sure TD is happy the way it is, as am I for my TD shares


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## humble_pie (Jun 7, 2009)

m3s said:


> (1) I don't see it as Questrade's fault if someone decides to hold a USD paying stock in a CAD account...
> 
> (2) Even if it was, I would actually convert that USD to CAD because I actually want CAD in my CAD account



(1) of course it's questrade's fault. The 3 so-called USD rrsp brokers (questrade, bmo & roybank) hold canadian shares in canadian side of account by default. Dividends from the 18 canadian companies that pay their divs in USD are routinely hit for FX fees. These 3 brokers are doing this just as silently & as secretly as all the other brokers.

the solution is so simple. Inform clients so they can elect to hold those canadian shares on US side of the account. The broker staff will have to be trained to help the clients; at present they are not trained so they tend to deny the situation is occurring.

(2) you might convert USD to CAD at your pleasure, but wouldn't you always choose to do this at a fantastically better rate than the 1.50% which the broker is going to rip off from you?

these days lots of people arb currencies via gambits for no FX fees whatsoever, only a couple of inexpensive trade commissions. Investors with access to forex at IB can also exchange USD/CAD at rates so low they seem unbelievable.

ripoff rates like 1.50% should be extinct as the dodo. Mode i hope you are not saying that you are in favour of broker ripoffs as long as they are questrade ripoffs?




> TD should hire me if they can't figure out a patch for this simple programming problem of having FX fees reversed or refunded


they can't do it this way ... thinggabbout it ... nevertheless i will tell them you might be willing whenever home from african sahara, southeast asian jungles & other exotic venues ...


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## Fain (Oct 11, 2009)

humble_pie said:


> (1) of course it's questrade's fault. The 3 so-called USD rrsp brokers (questrade, bmo & roybank) hold canadian shares in canadian side of account by default. Dividends from the 18 canadian companies that pay their divs in USD are routinely hit for FX fees. These 3 brokers are doing this just as silently & as secretly as all the other brokers.


Questrade will not automatically auto convert currencies unless a client intructs them too. You choose your settlement currency. If you select Trade Currency then their won't be auto fx conversion, example being High Interest Savings Accounts offered at Questrade or USD money market mutual fund.


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## m3s (Apr 3, 2010)

humble_pie said:


> (1) of course it's questrade's fault. The 3 so-called USD rrsp brokers (questrade, bmo & roybank) hold canadian shares in canadian side of account by default.
> 
> (2) you might convert USD to CAD at your pleasure, but wouldn't you always choose to do this at a fantastically better rate than the 1.50% which the broker is going to rip off from you?
> 
> (3) they can't do it this way ... thinggabbout it ... nevertheless i will tell them you might be willing whenever home


(1) Questrade should monitor all the stocks in case they decide to pay CAD again or start paying USD? It sure would be nice if they did but the onus is more on the holder here. Keeping USD DRIPS in USD is more of a basic expectation and responsibility of the brokerage

(2) If a CAD stocks pays USD in my TFSA account, I have no simple way to use that USD or to pool it with my USD funds without affecting the TFSA etc. There's not enough in a TFSA to arb it and USD stocks are better held somewhere else. I'll just keep these stocks where I can use USD in the future.

(3) Tell them I won't be back for awhile, but I can still pull it off, while I have nothing better to do but lie in the 40 degree sun. If I need help, there are even lots of cheap intelligent labour around and I'm probably only a short hop from the rest of TD's outsourced IT shop.


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## humble_pie (Jun 7, 2009)

fain i believe you are posting about the universe of US securities including US stocks, etfs, MMFs & others that pay dividends & distributions in US dollars? 

afaik these are fine at questrade & specifically they are fine in questrade rrsp accounts. Also in bmo & roybank rrsp accounts (these are the other 2 well-known USD rrsps).

it's to gain all these excellent USD benefits that clients open registered accounts at these brokers, no?

however, there is a small sub-group of USD dividend payors where even questrade, bmo & roybank are failing. These are the 18 interlisted canadian companies that pay their dividends in US dollars. Please find below a list of these companies.

as you can see, they are among canada's largest cap stocks. They are widely held by millions of canadian shareholders. All canadian brokers are charging hidden FX fees on dividends from these 18 companies unless the shares have been deliberately journalled - upon the client's pro-active instruction - over to the US side of the account.

the concealed FX fees apply to dividends from these 18 companies whether the shares are held in cash, margin or registered accounts. The default location for these shares is always canadian side of an account; clients who want to protect their US dividends have to disrupt the default.

http://www.moneysense.ca/2012/08/22/canadian-stocks-paying-us-dollar-dividends/

The TSX website is good place to check the currency of dividend payments. The following Canadian stocks pay dividends in US dollars:

_Encana Corp. (ECA)
Talisman Energy Inc. (TLM)
Potash Corp. of Saskatchewan (POT)
Agrium Inc. (AGU)
Methanex Corp. (MX)
Barrick Gold Corp. (ABX)
Goldcorp Inc. (G)
Kinross Gold Corp. (K)
Yamana Gold Inc. (YRI)
IAMGOLD Corp. (IMG)
Inmet Mining Corp. (IMN)
Thomson Reuters Corp. (TRI)
Magna International Inc. (MG)
Brookfield Office Properties Inc. (BPO)
Brookfield Asset Management Inc. (BAM.A)
Brookfield Infrastructure Partners LP (BIP.UN)
Brookfield Renewable Energy Partners LP (BEP.UN)
WaterFurnace Renewable Energy Inc. (WFI) _


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## Xoron (Jun 22, 2010)

humble_pie said:


> the consensus is black & white. Do. Not. DRIP. US. Dividends. Unless. It's. A. USD. RRSP. Broker. There are only 3 of these, maybe 4. All the rest are going to hit up US drips not once, but twice.
> 
> take cash divs instead. They'll only get FX'd once.


Rather than reinvent the wheel (USD RRSP Accounts), why not just offer a better exchange rate? Wouldn't that appease most investors holding USD stocks in a CAD RRSP / TFSA account? 

Sounds like a relatively easy fix to a complex problem.


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## humble_pie (Jun 7, 2009)

Xoron said:


> Rather than reinvent the wheel (USD RRSP Accounts), why not just offer a better exchange rate? Wouldn't that appease most investors holding USD stocks in a CAD RRSP / TFSA account?
> 
> Sounds like a relatively easy fix to a complex problem.



u have a good point; the big green might be thinking about that, at least for registered accounts.

the issue about FX fees being charged by *all* brokers on the 18 interlisted canadian dividends in *all* accounts whether cash, margin, registered, etc, is a separate but kissing cousin FX issue.

there's a 3rd issue that i might write about later, but it's already the subject of a class action.

but back to double-dipping on US DRIPPed dividends in registered accounts, the suggestion is Do. not. drip. em. Even if brokers lowered the FX rate, their system would still double-dip.


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## mrPPincer (Nov 21, 2011)

TDW is still charging 2% for the one-way,
as documented above in my previous post

so whether you drip or not only makes approximately 0.8% difference with TDW

TDW always takes it's bite out, and an obsenely big bite, for absolutely nothing.

It seems TDW has no interest whatsoever in appeasing it's customer base on this.


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## Xoron (Jun 22, 2010)

mrPPincer said:


> It seems TDW has no interest whatsoever in appeasing it's customer base on this.


Sure it's a big deal for us CMFers, but for the average investor, they probably don't know/care. I'm sure we're a small % of the overall TDHW customer base, so why change it if it's only going to cost them (TDHW) money? At worst, they'll lose a few investment accounts.

I mean, look at the number of people out there that still buy 2.5%+ MER Mutual Funds. And that's year in year out regardless of the fund's performance. The FX Rate is a pittance compared to the costs on receiving a USD dividend in an RRSP account. And people continue to buy/hold these MFs


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## humble_pie (Jun 7, 2009)

just for the record each:

*all* brokers without USD rrsps are double-dipping FX fees on US dividends in rrsp which poor unfortunate investors have innocently chosen to DRIP.

all brokers.
everywhere.
not just td waterhouse.

do u have a registered account at cibc, scotia itrade, hkbank, natbank, disnat? do not DRIP your US divs in reg'd ...


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## Xoron (Jun 22, 2010)

humble_pie said:


> just for the record each:
> 
> *all* brokers without USD rrsps are double-dipping FX fees on US dividends in rrsp which poor unfortunate investors have innocently chosen to DRIP.


Agreed, they're all as bad as each other. each:


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## mrPPincer (Nov 21, 2011)

Are they all charging 2% for a one way FX charge on USD dividends to CAD?

Because TDW is charging 2% 

Does anyone have evidence that the other brokerages that don't have true US$ RSP are also charging 2%, as TDW is?

Otherwise I would say TDW is the worst, not equally bad


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## Eclectic12 (Oct 20, 2010)

mrPPincer said:


> ... Because TDW is charging 2%
> Does anyone have evidence that the other brokerages that don't have true US$ RSP are also charging 2%, as TDW is?
> 
> Otherwise I would say TDW is the worst, not equally bad


It's a good question but assuming a lack of posts identifying a similar fx rate means a particular brokerage is the worst is jumping to conclusions, IMO.

Don't forget there are a lot of investors who are unaware so that they've argued that a Canadian company does not pay dividends in USD. Even where they are aware, how many are going to take the time to sit down, figure out what the USD payment was and what the fx rate ended up being?

Given how close to each other the big Bank brokerages are on commissions, I suspect that when the evidence is posted, the rates are likely to be similar. Why would another bank brokerage want to give up padding their profits on an obscure item like this?


Cheers


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## Xoron (Jun 22, 2010)

I'll try and calculate it a few past dividends in my RRSP at CIBC.

But is the FX rate the date of record, or day of payment? 

Side note, why the hell does it sometimes take so long to get some div payments? I never really paid too much attention, but the lag between Rec and Pay dates can be significant:

*Short Example: * VANGUARD FTSE EMERGING MARKETS ETF FTSE EMERGING INDEX ETF FTSE EMERGING INDEX CASH DIV ON xxx SHS REC *06/26/13* PAY *06/28/13*
*Long Example: * ACTIVISION BLIZZARD INC CASH DIV ON xxx SHS REC *03/20/13* PAY *05/15/13*

*But two weeks seems to be more typical:* SEAGATE TECHNOLOGY PLC CASH DIV ON xxx SHS REC *05/15/13* PAY *05/29/13*


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## pablito (Apr 3, 2009)

humble_pie said:


> do u have a registered account at cibc, scotia itrade, hkbank, natbank, disnat? do not DRIP your US divs in reg'd ...


I'm with TDWH and wasn't aware of this practice. I have been DRIPing some USD ETFs in an RRSP account.

So what's the right thing to do here? If I stop dripping the USD holdings altogether... will the dividends be deposited directly in the USD money market fund without this double conversion? Then I guess it is a matter of using the funds come re-balancing time. What a shame... and a pain in the backside.


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## m3s (Apr 3, 2010)

Eclectic12 said:


> It's a good question but assuming a lack of posts identifying a similar fx rate means a particular brokerage is the worst is jumping to conclusions, IMO.
> 
> Cheers


Let's settle this once and for all then.

I always cross check my dividends and records looking for foul play but without more examples it wasn't worth posting. I have found that TD consistently charges me higher exchange rates than ING on foreign cash withdrawals and I suspect higher rates at TDWH than Questrade as well (much higher than IB hands down)

POT 04/11/13 Div $0.28USD per share
XE 04/11/13 historical $1USD = 1.0108486696CAD
$0.28USD = $0.2830CAD per share

Received *$28.30CAD* on 05/02/13 for 100 shares

Use the pay date instead?
XE 05/02/13 historical $1USD = 1.0085866157CAD
$0.28USD per share = $28.24CAD for 100

Now the challenge is for someone with TDWH to post an unadulterated screen shot of their POT 04/11/13 dividend instead of dancing around the subject


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## mrPPincer (Nov 21, 2011)

The conversion rate should be the Bank of Canada closing rate on the day the company pays the dividend, not the day your brokerage processes the dividend.

m3s, in your example above you used the april 11 mid-market rates from the xe calculator
according to my records* (a printout from my G&M porfolio page) the BoC closing rate for april 11 was US$=C1.0107), 

So if POT paid out a $0.28USD dividend, 
then at BoC closing rates, the dividend was worth $0.282996CAD, or C$28.30 for 100 shares, *exactly what you were paid !!!*
You said you have your POT shares with Questrade??


pablito,

TDW typically pockets about 1.9% in the first conversion from $USD to $CAD regardless of whether you drip or not

If you drip, the amount pocketed by TDW on the conversion back from $CAD to $USD is less, usually an additional 0.9% or so, on top of the 1.9% or so that gets taken from every Canadian that has $US divys with TDW in a registered account,

so you are gonna get stung by TDW regardless; if you want the extra shares, you may as well drip them, the additional 0.9% is less than a simple one-way conversion plus trading fees.. unless you do a Norbert's gambit and buy a large amount of shares, your choice.



*The closing rates for $USD to $CAD can be found on the Bank of Canada website; I didn't see the historical rate for april 11 2013 there, but I've found that the conversion rates on my Globe Porflioio printouts are always the same as the posted closing rates on the BoC website.


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## m3s (Apr 3, 2010)

mrPPincer said:


> So if POT paid out a $0.28USD dividend,
> then at BoC closing rates, the dividend was worth $0.282996CAD, or C$28.30 for 100 shares, *exactly what you were paid !!!*
> You said you have your POT shares with Questrade??


Yes there is a $28.30CAD paid from POT $0.28USD dividend on my last Questrade statement

I find it hard to believe they wouldn't take at least the 1.50% though. humble said others calculated a fee on ABX divvies at Questrade, and I wouldn't be surprised. Need more examples I think


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## mrPPincer (Nov 21, 2011)

m3s 
Then we have proof
You were not charged a conversion fee at Questrade

People who do the calculations have to use the BoC closing rates for the day of the comany's dividend, maybe that's where the confusion is coming from.

Were your POT shares in a $USD account or a $CAD account at Questrade?


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## Eclectic12 (Oct 20, 2010)

m3s said:


> Let's settle this once and for all then ...
> 
> Now the challenge is for someone with TDWH to post an unadulterated screen shot of their POT 04/11/13 dividend instead of dancing around the subject


Let's see ... your text is supposedly unadulterated but are worried that TDWH numbers are going to be modified unless it's a screenshot?
I didn't think that finding out was a challenge or adulteration was an issue ... or that dancing was required.


I'll see what I can find as I don't have the records with me ...


Cheers


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## Eclectic12 (Oct 20, 2010)

m3s said:


> Let's settle this once and for all then ...
> 
> Now the challenge is for someone with TDWH to post an unadulterated screen shot of their POT 04/11/13 dividend instead of dancing around the subject


Okay ... it took me a while to find as it's a single line item showing on my May statement dated May 2nd, 2013.

Using what was delivered as CAD to my account, for 100 shares of POT I received $27.79 CAD. Unless my math is wrong, using mrPPincer's BoC closing rate, that works out to 1.8% or so.

Now to see if any other from Scotia, RBC etc. post their results are well.


Clearly 0% at Questrade is going to be a front runner, if not outright winner. (Though like m3s, I'm really surprised that they wouldn't take at least something.)


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## m3s (Apr 3, 2010)

Eclectic12 said:


> Clearly 0% at Questrade is going to be a front runner, if not outright winner. (Though like m3s, I'm really surprised that they wouldn't take at least something.)


We need a few more examples from Questrade as well to verify it but I can always post a screenshot if there is any doubt. I would expect 0% if it was paid out in USD at Questrade but since it was converted to CAD this is surprising. Like I said you could always get 0% regardless by having it paid out in USD.


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## humble_pie (Jun 7, 2009)

the POT dividend is indeed only one example but it looks like m3 has made off with the very best deal at questrade! u can't get better than bank of canada noon rate.

now our sky warrior can relax on a beach near mombasa
happy to have bested humbee pie
in fair combat each:


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## mrPPincer (Nov 21, 2011)

humble_pie said:


> the POT dividend is indeed only one example but it looks like m3 has made off with the very best deal at questrade! u can't get better than bank of canada noon rate.


Yes humble, from what we've seen so far Questrade seems to be the best deal for registered USD divys, but m3s didn't get the BoC noon rate.

m3s got the BoC day's closing rate, not the noon rate.

Which stands to reason, don't you think?

If you were a brokerage handling millions of $ worth of dividends, would you close the day's files using the most current numbers or would you use the four-hour old numbers when you settle the books at day's end?


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## humble_pie (Jun 7, 2009)

general point of info:

nobody uses bank of canada closing rate. All financial institutions use the noon rate.

bank of canada rates are amalgams of world's leading money-centre banks, as their treasury floors trade among each other & report live. XE dot com follows extremely closely.

more world money-centre banks are open at noon, which is why noon rate is the bellwether.

europe & in particular all-important London are still going at noon EST but are long closed at the hour of BOC closing rates. Even Dubai financial centre may be still trading at noon, but long closed at 5 pm EST.


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## mrPPincer (Nov 21, 2011)

humble, ok, interesting, but..

the numbers that Questrade did use for their USD dividend conversion were BoC closing rates.

So I guess to put this to rest we could use some more numbers on Questrade USD dividends from inside a CDN$ registered account.


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## PatInTheHat (May 7, 2012)

Anyone mind giving me cliff notes? Safe to drip with QT?


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## Jungle (Feb 17, 2010)

Yes safe to drip with QT. However they don't honor drip discount which some popular CDN shares offer, however depending on how much you trade and the number of shares, the lower comissions at QT might make up for the lost drip discount.

I have noticed that TDW is very slow to post DRIP activity in my TFSA, sometimes taking 1-2 weeks. With Questrade, it usually shows up a day later.


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## Xoron (Jun 22, 2010)

Normally, with CIBC IE, I wash my USD buy and sell trades that are made on the same day. I just need to talk to a trader by 3pm to make it happen for the day's trades. (and they'll do the same thing using a USD MM fund if I want)

But, back in June, I forgot to do the FX Netting. Figured I'd share the FX rates I got on my trades that day (and unless I'm looking at this wrong, they're pretty good).

That day I had sold two different securities in my CAD RRSP Account. The actual FX rate on both trades were: 


> EXCHANGE RATE 1.01950


The same day, I purchased four different securities in my CAD RRSP account. The actual FX rate on the 4 trades were:


> EXCHANGE RATE 1.02150


So that looks like a 0.2% difference. Pretty competitive without me doing anything other than placing the trades online. Maybe CIBC has listened (or my calculations are off :rolleyes2?


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## Eclectic12 (Oct 20, 2010)

m3s said:


> We need a few more examples from Questrade as well to verify it ... I would expect 0% if it was paid out in USD at Questrade but since it was converted to CAD this is surprising.
> 
> Like I said you could always get 0% regardless by having it paid out in USD.


To add to the list of TDW currency conversions, the web interface is showing line items:



> POTASH CORP OF SASK INC
> CONVERT TO CAD @ 1.01750


and



> AGRIUM INC
> CONVERT TO CAD @ 1.02400


I have to run the calculations to see what everything works out to and I know that until the monthly statement is changed, the one these will included on won't mention that a conversion took place or at what rate.


Cheers


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## humble_pie (Jun 7, 2009)

Eclectic12 said:


> ... until the monthly statement is changed, the one these will included on won't mention that a conversion took place or at what rate.



eclectic the monthly statements from brokers are *not* going to be changed.

there are no regulations whatsoever, in any securities act in any province in canada, that require brokers to disclose the FX rates which they are, in fact, charging their clients every single day, upon several classes of US dollar-denominated dividends.

i've been carrying out research in this area for several months now. Investors for the most part do not realize this, but in fact there are no regulations governing the foreign exchange fees that brokers are able to charge. Brokers can charge whatever they want. If brokers could get away with FX fees of 99%, i do believe they would charge this!

consider, if you please, the recent jump in FX fees at questrade, up to 1.99% from the average 1.50% being charged by the rest of the industry. How long will it be before all the other brokers jump to the 1.99% level, also? There is nothing whatsoever that is going to stop them.

nor are there any regulations that require stockbrokers to disclose their FX fees to clients. Yes, they do make certain attempts. There are FX conversion tools on brokers' websites. Clients can phone to learn the spread of the moment. 

however, FX fees being charged on various streams of dividends are a virgin issue that brokers are not even beginning to deal with.

_coming soon, in the next instalment from your humble scribe: What the class action lawyers have to say about FX fees to indignant investors_


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## Eclectic12 (Oct 20, 2010)

humble_pie said:


> eclectic the monthly statements from brokers are *not* going to be changed ...


Probably correct for quite a while ... time will tell if the *not* is going to hold forever. :biggrin:


Cheers


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## james4beach (Nov 15, 2012)

humble_pie said:


> however, FX fees being charged on various streams of dividends are a virgin issue that brokers are not even beginning to deal with.


I'm seeing quite good foreign exchange rates applied to my USD dividends received in iTrade. FXA paid a 0.06128 US distribution on February 1. Google shows USDCAD on that day was 1.305 so on my 260 shares I'd expect to receive 260 x 0.06128 x 1.305 = 20.79 CAD

iTrade paid me 20.86 so there appears to be zero commission on the conversion fee. I think this is because I pay $30 flat per quarter for US friendly, which causes FX fees to be eliminated. They definitely give me pure market rates on stock trades, but this example also shows I'm getting market rates on dividends.

For very large accounts this $30 flat fee for US friendly is well worth it.


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## humble_pie (Jun 7, 2009)

^^

$120 a year is worth it?

couldn't you just keep your stocks paying USD dividends in USD account, meanwhile paying zero annual fee?

.


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## james4beach (Nov 15, 2012)

I have iTrade's US friendly because I make occasional US trades in this CAD RRSP account, not because of the dividends. I can turn the feature on or off, so I might only pay a single $30 during the year for the quarter I need it and then never pay it again.

But yeah, for USD dividends, using a USD account seems like the best way to go. I can't see $30/quarter being worth it just for dividends when you could open a separate USD RRSP.


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## humble_pie (Jun 7, 2009)

james4beach said:


> I have iTrade's US friendly because I make occasional US trades in this CAD RRSP account, not because of the dividends. I can turn the feature on or off, so I might only pay a single $30 during the year for the quarter I need it and then never pay it again.



you didn't quite confirm directly but i get the impression you can buy or sell a US stock in this account, pay for it in CAD or take delivery of proceeds in CAD & your prices will be converted at spot rates. Plus being able to turn this feature on & off for only $30 a quarter is attractive.

as you know, cibc reportedly had something like that in their monocurrency RRSP until recently, when they went to a dual currency system. Previously, we were told, they were converting all CAD/USD transactions at spot. Reportedly they were not charging anything for that system.

i was thinking that such a feature is especially attractive in a RRIF account that holds a lot of US securities & also faces mandatory withdrawals.

it's better for an investor client when USD deposits & withdrawals in registered accounts can be priced for the CRA in CAD at spot rates. It's not so good when they get priced at the broker's buy rate, with built-in FX fee.

in general, it's interesting to see the trend in registered account foreign exchange trading. Little by little, year by year, everything is trending better & better for investor clients. Different brokers are coming up with all kinds of different adaptive solutions. Sometimes these are halfway measures - such as charging $30 per quarter for the privilege of obtaining spot FX rates - but still a halfway measure is better than no measure at all, right?

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## james4beach (Nov 15, 2012)

humble_pie said:


> you didn't quite confirm directly but i get the impression you can buy or sell a US stock in this account, pay for it in CAD or take delivery of proceeds in CAD & *your prices will be converted at spot rates*. Plus being able to turn this feature on & off for only $30 a quarter is attractive.


That's right. It is a CAD account with CAD cash balances, and when I buy/sell a US security I see the amounts converted at spot rates. Note that even if you turn it on for just a day, you'll incur the full $30 fee.



> Different brokers are coming up with all kinds of different adaptive solutions. Sometimes these are halfway measures - such as charging $30 per quarter for the privilege of obtaining spot FX rates - but still a halfway measure is better than no measure at all, right?


I agree, these are improvements. Think of what amazing capabilities we have access to these days through discount brokerages, vs dealing with brokers in the 1980s.


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## TomB19 (Sep 24, 2015)

james4beach said:


> Think of what amazing capabilities we have access to these days through discount brokerages, vs dealing with brokers in the 1980s.


Back in the 80s, you had to give your money to a broker, negotiate an arrangement whereby he would action your requests, and then have an argument with him each time you want to make a move. Basically, you paid them to get in your way.


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## gibor365 (Apr 1, 2011)

> as you know, cibc reportedly had something like that in their monocurrency RRSP until recently, when they went to a dual currency system. Previously, we were told, they were converting all CAD/USD transactions at spot. Reportedly they were not charging anything for that system.


 That's true. We weren't charged anything. Now CIBC moved to true USD RRSP and they will be charging FX fee going forward. However,if ex-div date was before USD$ implementation, dividends still will be received/DRIPed at spot rate.
Now I have choice to move any time I want any stock to USD side and back to CAD side,for free with no limitation. I can even move to US side Canadian stocks that are traded OTC on US side. (did it with WIR.U)


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