# Trying to Execute a Norbert's Gambit at Scotia ITrade



## mrcheap (Apr 4, 2009)

Hi all,

I'm trying to execute a Norbert's Gambit at Scotia ITrade.

I bought DLR in the Canadian side of my account and asked them to journal it over to the US side of my account, which they've done. This account is non-registered.

After it had been moved over, I was expecting it to be DLR.U, but it's still DLR. When I try to put in a sell order, it says "Warning! This trade will be converted to the currency of your account." and it indicated it will sell it for Canadian dollars, then convert to USD (avoiding what was the entire purpose of this exercise).

I successfully did this 2 years ago (http://canadianmoneyforum.com/showthread.php/14481-Executing-Norbert-s-Gambit-at-Scotia-ITrade). The customer service reps I talked to had no idea what I wanted. Eventually I talked to a broker (via broker assisted trade) and he knew exactly what I wanted to do and executed the trade.

I've called and talked to two brokers and both couldn't understand what I was trying to do or what I wanted and got somewhat rude with me.

Any suggestions on how I should move forward to get this to sell in the proper currency (USD)?


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## mrcheap (Apr 4, 2009)

UPDATE: After a Redditor suggested I read Dan Bortolotti's excellent guide again (https://www.pwlcapital.com/pwl/medi...-iTRADE-accounts_v05-hyperlinked.pdf?ext=.pdf) I reviewed it, tried calling again and just saying "I want to place a limit order to sell X shares of DLR.U at the current bid price in my USD account" instead of explaining what I was trying to do and that seemed to work perfectly.

He first asked me if DLR.U was on a US exchange, and I clarified that it traded on the TSX, but was a USD denominated version of DLR.

I asked him to make sure that the trade would settle in USD - that I didn't want it to settle in CND then be charged for a currency transaction.
He was very careful, read back the order a couple of times and only charged me for an online trade.

Seemed to work out this time.


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## humble_pie (Jun 7, 2009)

.

this is an interesting case because it shows both (a) a sequence of good sensible actions by the OP; & also (b) a demonstration of wonderful goodwill & competence from the last broker representative he consulted.

all brokers other than BMO & royal bank have difficulties with the sell sides of gambit pair trades. These minor difficulties vary from broker to broker. In all cases, though (except BMO & RY) brokers must be phoned & asked to journal purchased DLR to the US side of an account.

parties selling DLR.U or any other interlisted stock via phone call are sometimes asked to pay a full agent-handled commission. The DLRs are used because when moving from DLR to DLR.U, the US currency is pegged. Therefore a 3 or even a 5 day delay will not matter (notice that this does not work in reverse, only DLR.U is pegged.)

(aside to mr cheap, the OP) i'm not a scotia client, so i'm not familiar with the scotia website order platform.  It sounds as if you had done everything right, ie bought DLR, then had it journalled to US side of the account, however the first mistake might have appeared when it failed to manifest itself there as DLR.U.

i did glance at your earlier message from 2013. It *might* be that scotia is not training their broker representatives fully at handling these trades (for example the 2 reps you met at first, who were not helpful) for the good & simple reason that - for all brokers except the above-mentioned BMO & RY - currency gambit pairs are a total absolute PITA. They are extra bother for the licensed reps & some of the reps resent the bother.

however, gambit trades are basically nothing more than classic arbitrage trades, which have been legally practiced across hundreds of years, therefore no broker can legally refuse them (for a very brief while, back in 2010, the TD did refuse gambit trades) (the refusal only lasted 2 or 3 short weeks, so i assume their legal counsel straightened them out)

when one thinks about it, there is no reason for any broker to encourage or train its licensed reps to be super-helpful with gambit trades, since by definition currency gambit traders are avoiding the relatively high FX fees which brokers normally charge.

here's my best guess about what should have happened in your scotia account: 1) after the journal, the security should have appeared in the US account as DLR.U; & 2) the online sell order might have been Sell DLR.U out of US account into canadian market; however i do not know the exact scotia protocol.

could you possibly find that 3rd helpful representative again & ask him to confirm the online sell side protocol with you?

in any event, i'm happy that you succeeded .each:



.


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## slacker (Mar 8, 2010)

Works fairly well on Questrade. I did it 2 or 3 times in the last 6 months.

1. Buy DLR.TO online
2. Wait for settlement date (optional)
3. Live chat Questrade agent, "I have XXX units of DLR.TO in my account ####. Please journal all XXX units into DLR.U.TO."

Wait 1 more day, and the units show up as DLR.U.TO on my account. No fees were charged for the journal.


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## humble_pie (Jun 7, 2009)

^^

i heard some time ago that the DLRs work fine on questrade. One should keep in mind that the reverse - eg DLR.U --> DLR- doesn't work as well because only DLR.U is pegged, therefore a party commencing with DLR.U runs currency risk until he can manage to get his position sold in the opposite currency.

the OP's case was handicapped by what appears to be a manual error made when the OP phoned to journal the stock. Although the OP's instruction must have been clear, it appears that the scotia rep who took that instruction made a small mistake & what showed up in the US account was DLR, not DLR.U ...


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## Value (Jul 31, 2015)

Awwww DLR... Helping canadians get out of CAD since 2007.


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## jdc (Feb 1, 2016)

mrcheap said:


> UPDATE: After a Redditor suggested I read Dan Bortolotti's excellent guide again (https://www.pwlcapital.com/pwl/medi...-iTRADE-accounts_v05-hyperlinked.pdf?ext=.pdf) I reviewed it, tried calling again and just saying "I want to place a limit order to sell X shares of DLR.U at the current bid price in my USD account" instead of explaining what I was trying to do and that seemed to work perfectly.
> 
> He first asked me if DLR.U was on a US exchange, and I clarified that it traded on the TSX, but was a USD denominated version of DLR.
> 
> ...


That was my experience too. However, going the other way, buying DLR.U in the US account, requesting the journal to the CDN account, I found that I was able to sell the DLR in the Canadian account online myself. YMMV.


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## james4beach (Nov 15, 2012)

This is an old thread, but I'm looking for information on how to do gambits these days with Scotia iTrade.

I have an RRSP with both CAD and USD sub accounts. The USD account has about 30K USD cash. What's the recommended way to convert this to CAD?

The PWL Capital guide is out of date, since the US Friendly feature has been discontinued. The other instructions are to use DLR, which is doable, but not optimal going from USD to CAD. I'm just wondering if anyone has done this recently and can recommend what the best method is?


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## james4beach (Nov 15, 2012)

Here's how I did it in iTrade, going from USD to CAD

1. Bought DLR.U in the US sub-account (gives USD amount), but remember to select market CA as it trades in Canada
2. Phone Scotia as soon as the order filled. The agent shifts the shares to the Canadian sub-account. You're now long DLR.
3. Sell DLR in the Canadian sub-account using the web system.

All of this can be done within a few minutes and the only fee is $9.99 for DLR.U but no commission on DLR. This is a very cheap gambit! Remember that you will need to reach a phone agent to move those shares in between your two orders.

The agent tells me that at the end of the day, the system will show me as short the shares in one account and long in the other. He says that upon T+2 settlement, or rather the day after, I'll see the positions collapse and zero out automatically.


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