# Norbert's Gambit no longer possible with TDW?



## Namael (Jul 14, 2013)

I recently did a conversion from CA to US using DLR with TD Waterhouse. When I called to journal the shares over, they told me it would cost me a commission of roughly ~$80, as per their US commission schedule: http://www.tdwaterhouse.ca/products...vesting/commissions-fees/#telephone-brokerage. 

I had done this in the past and I was never charged. She said they would let it go this time but would note my account for future.

Anyone have this problem lately with TDW?


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## avrex (Nov 14, 2010)

I'm assume that you are talking about a *non-registered account*.

Here is the non-registered excerpt, taken from Norbert’s Gambit : Buy U.S. dollars in a TD Direct Investing RRSP.



> When you perform Norbert’s gambit in a non-registered account at TD Direct Investing, most of the steps are the same as in an RRSP.
> However, you will need to wait three business days (T+3) for the DLR trade to settle on the Canadian-dollar side of the non-registered account before asking TD to “journal” the shares to the US-dollar side (Alternatively, you can contact a trader at TD and *immediately sell DLR.U, but this will cost you $43* instead of the usual online trade commission). Once this is complete, you will be able to sell DLR.U and buy your US-listed ETF.


*Here's the cheap way to do it:*
*1*. Buy DLR (CAD). This online transaction is $9.99. 
*2.* After 3 days, call TD to have them "journal" your shares to the US-dollar side. (I thought TD would do this for free.)
*3.* Sell DLR.U. This online transaction is $9.99. 

It sounds like they charged you the phone transaction commission for both the buy and the sell. i.e. $43 + $43


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## humble_pie (Jun 7, 2009)

avrex said:


> *Here's the cheap way to do it:*
> 
> *1*. Buy DLR (CAD). This online transaction is $9.99.
> *2.* After 3 days, call TD to have them "journal" your shares to the US-dollar side. (I thought TD would do this for free.)
> *3.* Sell DLR.U. This online transaction is $9.99.



these steps are correct

re step # 2: TD has always journalled without charge & continues to journal without charge in the same account.

namael it looks like some thing(s) went wrong in your attempt, either in your instructions to TD or in the representative's response or in both.


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## larry81 (Nov 22, 2010)

Sometime, uninformed TD rep will give you a hard time with NG.

Just thanks them for the information, finish the call, wait 5min and call back.

Repeat until you find a friendly rep.

After performing the ng, ask for your new friend phone extension and call him directly when you need to perform NG. I have three rep that i can call who perform NG on the spot with web commish.


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## humble_pie (Jun 7, 2009)

i believe that larry might be hinting his status again
he gets the web commish for the sell side of a gambit trade because he's a hi-value client each:

us peasants, alas, have to resign ourselves to paying an agent's phone commish for the instant sell side of a gambit pair, in TD non-registered accounts.

btw *never* pay full commish for both sides of an instant gambit trade. Instead, do this:

- set up your detailed quotes for the interlisted stock in both markets; choose the day & moment properly;

- prepare the online buy side order but don't send it;

- get a cooperative agent on the phone & make sure he understands exactly what you intend to do;

- send the buy order (low online commish); a good agent will have already prepared the sell order;

- as soon as agent sees you have bought, he will send the sell order;

- & you're done! curtsey & bow, it's like a little two-step dance

PS don't forget that in TD registered accounts it's possible to gambit trade both sides instantly, online, for 2 cheap online commissions, ie the platform in registered account is different.


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## Namael (Jul 14, 2013)

It was in a non-registered account, I didn't realize there was a difference in the system for non-registered vs registered. The rep ended up doing the trade for me using the online commission, but said she would "note" my account, whatever that means. The reason for the ~80 was because of this commission schedule: $5.01 - $10 share price:	$39 + $0.05/sh.

I think I will try the advice above with calling first before the buy. Or I will find a way to get more "clout" haha. 

Thanks for the advice guys.


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## james4beach (Nov 15, 2012)

I'm going to be doing a reverse gambit in a few days, also non-registered, and will post my findings. Other than it being the reverse direction, it's the cheap steps avrex described.

My methodology is: buy DLR.U using USD, wait for it to settle, phone and ask to journal it to DLR, sell DLR and receive CAD.


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## humble_pie (Jun 7, 2009)

james4beach said:


> I'm going to be doing a reverse gambit in a few days, also non-registered, and will post my findings. Other than it being the reverse direction, it's the cheap steps avrex described.
> 
> My methodology is: buy DLR.U using USD, wait for it to settle, phone and ask to journal it to DLR, sell DLR and receive CAD.



the drawback to this has been mentioned several hundred times over 2 or 3 years ...

of the 2 DLRs, only DLR.U is pegged. Therefore if you travel from USD to CAD, you will expose yourself to currency fluctuation for 5 days.

at the TD, in a non-registered account, gambit traders are better off doing an instant gambit using an interlisted carrier stock.

the sell side has to be accomplished by a licensed rep. In the manner set forth above. There is a phone commission. For USD-->CAD gambits, there is no reliable alternative.

some have "succeeded" with slow 5-day DLR.U-->DLR arbitrage. They have "succeeded" because a) currency FX rates happened to move in their favour during the 5 days; or b) currency fluctuation over a 5-day period may be less than stock fluctuation.

alternatively, you could open an account at BMO or royal bank, as has also previously been mentioned. Their web platforms support inexpensive instant online gambit trading in both registered & non-registered.


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## humble_pie (Jun 7, 2009)

a general message:

when gambit trading at a broker that requires a phone call to handle the sell side order (most brokers other than BMO or roybank) do not pick the DLRs as the carrier stock.

what the gambit trader needs for an agent-handled sell side is as few shares as possible, in order to keep the commission as low as possible, given that there is a cents-per-share charge. He should therefore look to pick an expensive carrier stock such as BMO or RY.

the DLRs are too inexpensively priced & there will be too many DLRs in an agent-handled DLR gambit.


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## NorthernRaven (Aug 4, 2010)

It looks like TD never restored _any_ swap capability between RRSP and non-registered accounts after they threw the baby out with the bath water in 2011? Prior to that, you could swap TD money market funds with no fee. But they don't have any swap stuff in their current commission schedule, so I assume it never came back. RBC does show a $35 swap fee, so I assume they did revive them, but the nifty "free using TD funds" thing would have let people who happened to have RRSP liquidity do the easier registered gambit and swap with non-registered cash.

BTW, there's a "Special note" highlighted in a green box on page 3 of TD's current commission document that wasn't there a couple of years ago:
_When an order is placed through one service (for example,
an Investment Representative) and then changed through a different service (for example, an Electronic Brokerage Service), the commission charged will be based on the service with the higher commission structure._​Perhaps they (or some agents) are now considering the journalling as a "change" on the original order and charging the phone commission on the first transaction?


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## Ihatetaxes (May 5, 2010)

This is what I do with RBCDI... (and zero phone calls or waiting required)

Buy dlr normally with Canadian funds.

To sell:

Do NOT click the sell tab from the position sheet. Create a new sell order. Sell from CDN acct and do not change market tab to US.

Enter DLR.U in the stock code box. This is the trick.

Works every time for me.


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## RBull (Jan 20, 2013)

^ditto


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## humble_pie (Jun 7, 2009)

dear taxes & bull

guys you should be able to understand that only RBC & BMO Investorline work like this.

by a fluke, the TD registered account platform also works like this.

no other broker platform works like this.

every other broker platform requires a special effort to handle the sell side of a currency arbitrage trade, aka a gambit trade.

the DLRs were invented for clients of slow-poke brokers with expensive agent-handled sell sides. But the DLRs only work for CAD-to-USD operations, because only one side is pegged.

actually, the art & science of currency arbitrage is not the transaction itself, which is an extremely simple pair trade. The art & science consist of knowing which brokerages can do what & with whom & at what price.

(sigh) sometimes i think that poor pie is the only crumb in canada who has this knowledge ...


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## james4beach (Nov 15, 2012)

humble_pie said:


> the drawback to this has been mentioned several hundred times over 2 or 3 years ...
> 
> of the 2 DLRs, only DLR.U is pegged. Therefore if you travel from USD to CAD, you will expose yourself to currency fluctuation for 5 days.


It's true that using DLR to go from USD to CAD requires that you wait, and you're exposed to currency movements in that period. Then again nobody can predict FX five days in the future, so there's no reason to think that you're losing profit during the wait.

For me anyway, this is a non issue because the USD that I'm converting has a long voyage, and it starts several months earlier. In reality I'm exposed to currency fluctuations for 100 days or more so an additional 5 days at the brokerage doesn't make any difference.

So DLR does work for USD-to-CAD, as long as you're aware that there's a time lag involved and you can't lock in an FX rate that you see in real-time. Depending on your urgency and your belief that you can predict FX spot rates, it may be a non-issue.


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## atrp2biz (Sep 22, 2010)

Except I don't like doing this with DLR. A two cent spread on a $10 stock is much different that a two cent spread on a $100 stock. I like using the banks for this.

And as a reminder...never do this with current holdings with paper gains as it will create a taxable event on those holdings (since your ACB would change).



Ihatetaxes said:


> This is what I do with RBCDI... (and zero phone calls or waiting required)
> 
> Buy dlr normally with Canadian funds.
> 
> ...


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## My Own Advisor (Sep 24, 2012)

"actually, the art & science of currency arbitrage is not the transaction itself, which is an extremely simple pair trade. The art & science consist of knowing which brokerages can do what & with whom & at what price."

@HP, funny comment. That's the trick I think, figure out what your brokerage does w.r.t to currency exchange based on how you invest and how often you invest, and either live with it or move on.


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## humble_pie (Jun 7, 2009)

atrp2biz said:


> I like using the banks for this.
> 
> And as a reminder...never do this with current holdings with paper gains as it will create a taxable event on those holdings (since your ACB would change).



but isn't that the question, though. *How* would one exchange currencies at the bank without an FX fee? i know of no way ...

2nd point is well taken. Never use a carrier stock that you hold already, the gambit disposition will trigger capital gains or losses.


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## james4beach (Nov 15, 2012)

What's the correct way to report (for taxation) the gambit trade using DLR and DLR.U ?

I presume they are the same security for tax purposes, right? So all you're doing is buying and selling the same thing at the same price (since you convert both to CAD for tax reporting). In other words, you report $0 capital gain for this short-term trade. Is that about it?


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## atrp2biz (Sep 22, 2010)

Sorry, when I mean with the banks I mean with the interlisted shares of the big five banks.



humble_pie said:


> but isn't that the question, though. *How* would one exchange currencies at the bank without an FX fee? i know of no way ...
> 
> 2nd point is well taken. Never use a carrier stock that you hold already, the gambit disposition will trigger capital gains or losses.


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## larry81 (Nov 22, 2010)

humble_pie said:


> i believe that larry might be hinting his status again
> he gets the web commish for the sell side of a gambit trade because he's a hi-value client each:


no no, just ask nicely and politely to the web agent, should be able to get 9.99$ commission since its a limitation of their system that force you to phone them.


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## humble_pie (Jun 7, 2009)

larry81 said:


> no no, just ask nicely and politely to the web agent, should be able to get 9.99$ commission since its a limitation of their system that force you to phone them.




there are many "limitations" to every broker's "system" & there will probably always be orders that cannot be done online & therefore these orders must be placed through a licensed rep.

i agree that the big green is right now passing through a generous phase where the agents will, by & large, offer web commish for all sorts of transactions that do involve extra manual labour on their part.

in the past & in times of critical rule application the big green has charged higher commish for agent-handled option spreads, buy-writes, currency gambits, pink sheet trades, etc. However these days seem to be flex days at TD, commission-wise.

here's an interesting tidbit: for active traders - clients who do 150 trades per quarter - the TD is quietly matching scotia's new & much-advertised $4.99 commission, which is also for active traders.

TDDI is not advertising this new low commish, but that's how the biscuit is being cut right now.

i suppose what will happen next is that if too many scribes like larry & pie keep blabbing in the internet about how to coax out new lower commissions from the big green, then too many clients will start phoning them ... then they will have to revert back to the official high commish in order to stop the torrents of phone calls lol each:


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## james4beach (Nov 15, 2012)

Does anyone know the story with half cent increments on trades of DLR and DLR.U ?

There appear to be occasional fills at 0.005 and I'm wondering if a retail investor can ever get these:

http://web.tmxmoney.com/quote.php?qm_symbol=DLR.U
http://web.tmxmoney.com/quote.php?qm_symbol=DLR

07/29/2014 12:28 PM EDT fill at 10.815 on exchange CX2 ... but half cent trades also show up on TSX


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## humble_pie (Jun 7, 2009)

james4beach said:


> Does anyone know the story with half cent increments on trades of DLR and DLR.U ?


some broker platforms cannot handle 4 decimals in order placement on website platforms but the licensed representatives can take such orders ...

lol be super-nice to em james 4 ... style larry81 ... so they don't wallop you with an agent-handled commish each:


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## james4beach (Nov 15, 2012)

That's a good reminder to be polite to them  The guy at TDDI today seemed very nice, I should have asked for his name.


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## james4beach (Nov 15, 2012)

Reverse gambit update from TDDI. Still works the cheap way:

1. Buy DLR.U with USD on the US margin account, web order (Tuesday)
2. Phone and ask them to journal to Cdn account. Rep said he'll do it as soon as trade settles.
3. Sell DLR and receive CAD on the Cdn account, web order (Friday)

There you go, USD converted to CAD with $9.99 commissions in just 3 days. Interesting here I only waited the 3 day settlement and I was able to make a web order on the journalled shares. I appreciate the help offered by the reps and the speedy journal action: what nice guys! This is why I keep coming back to TDDI.

And the results are beautiful. Ignore the fact that USD appreciated while I waited and consider it an FX operation done just on Friday.

Market USDCAD fx rate 1.0912. Ignoring commissions and carefully placing limit orders, DLR let me achieve 1.0913 which is the exact market rate (0.00% FX fee). The 2x$10 trade fees are the only cost (0.13% commission). *Thus the total end to end fees for doing this FX was 0.13%* ... the lowest I've seen yet thanks to improved liquidity on DLR

0.13% is mind boggling cheap for currency exchange. TDDI's built-in FX conversion is about 1.4% fee.


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## james4beach (Nov 15, 2012)

By the way, TDDI seems to do a nice job routing these orders too. I'm seeing different parts of my order fill on CX2 and Alpha and quite fast fills.


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## avrex (Nov 14, 2010)

james4beach said:


> Thus the total end to end fees for doing this FX was *0.13%*


That is awesome! Great work james.

Many people say that performing a gambit with an interlisted stock or with DLR is too hard. 
They then contact their bank/discount broker and pay the outrageous 1.50% currency conversion fees. Yikes.

I say if you want to save significant money, learn how to gambit.


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## PoolAndRapid (Dec 3, 2013)

..


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