# ADR processing fee



## canadian_investor (Jul 4, 2011)

i have a few Adrs in my rrsp account. brokerage is questrade.
i have noticed that every time there is a dividend payment they charge an ADR processing fee.
is this customary or is this brokerage dependent?
it is not a small amount either....varies between $4 to $7 depending on the stk.
even when there is no withholding tax like for british ADRS


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## humble_pie (Jun 7, 2009)

how very interesting.

it's not customary, it's a questrade peculiarity.

i recall at the time of the spanish telefonica stock dividend, all the questrade clients in cmf forum were miffed because questrade could not take up the dividend as stock but could only accept the cash dividend. What that told me is that its platform couldn't interact with some of the subtler details of the CDS delivery system, which was, in fact, delivering the TEF dividend.

i suppose you know that questrade built its own mainframe? ottomh i'd say that the software enabling ADR deliveries was poorly written & should be improved.

$4 to $7 per dividend is a lot to pay. I could see $.40-.70, but 10 times that amount is too high imho. Perhaps you could take up with questrade that you'd like to see their platform improved? alas one would have to allow several years for this to come about though.


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## canadian_investor (Jul 4, 2011)

i was one of those questrade customers upset at the Telefonica scrip dividend.
that they could not pay it in stock but in cash and took the 30% withholding tax off of it.
i sold TEF soon thereafter and it doesn't pay a dividend any more anyway.

i will have to check exactly how much ADR processing fee they are charging per share.
it is not $4 to $7 per share.
it must be some fraction but it gets multiplied by # of shares and ends up being $4 to $7 per dividend payment.
every single ADR is being subject to this fee.
some of them are : British petroleum, France Telecom, Shell petroleum, Vodafone, New Zealand telecom and a couple of others that I have.
as my account size has grown over the years it is no longer a trivial amount.

i feel silly...all this time i had supposed this fee is being charged by the transfer agent processing the dividend payment not by questrade itself.
unfortunately questrade is the only brokerage i have ever traded with.


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## livewell (Dec 1, 2013)

I own two ADR's Santander (Spain) and National Grid (UK) at TDW and I am charged a fee with both. For SAN it was ~0.27 cents a share and NGG it was 1.1 cents a share for the last divi. SAN as a Spanish ADR also has a 21% withholding tax, but they offer a SCRIP program where they sell the stock at market value that eliminates the withholding tax (But you have to phone up TDW every time to make the election.)


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## humble_pie (Jun 7, 2009)

not to feel silly. The amount you are mentioning is significant. If you are paying $4-7 per dividend, then on a 4-dividend stock this would be $16-28 per annum.

many foreign shares only pay twice a year, but even so the amounts become $8-14. Times the 7 underlying overseas stocks that you mention.

i do feel it's an issue that could be brought up with questrade, because long-term it's an issue they should improve. It looks as if the interface with CDS was not properly developed with respect to the ADR sector, therefore the broker has to enter transactions manually & is charging for the work.

alas i have learned from sad experience that approaching broker bureaucracies with requests for reform - no matter how beguiling, how polite, indeed how irrestible are the requests - is often doomed to failure.


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## humble_pie (Jun 7, 2009)

livewell said:


> I own two ADR's Santander (Spain) and National Grid (UK) at TDW and I am charged a fee with both. For SAN it was ~0.27 cents a share and NGG it was 1.1 cents a share for the last divi


i am fixated w horror. Just looking at SAN, does that mean that for every 100 shares you will pay a fee of $27? omg please tell me i'm wrong! not twenty-seven dollars fee to obtain one dividend payment for 100 measley shares!


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## canadian_investor (Jul 4, 2011)

you are right, fortunately all the ADRs I have pay semi annually
I looked up my questrade account to calculate the exact fee.
unfortunately questrade account history goes back only 12 months what a shame.
the fee varies by stock.
the british ADRs fee seem to be between 1.5c. per share to 2c. per share.
Vodafone is the highest at 2c.
french telecom fee is also 2c. a share.
i can't lookup what it charged for telefonica because that was back in 2012.

there is one other very curious phenomenon.
one such stock is New Zealand Telecom.
symbol NZT.
used to be an ADR.
and questrade charged me ADR processing fee for the dividend payments like the rest of the ADRs.
but...but...mid last year, NZT unlisted the ADR and is now trading otc.
but guess what....the ADR processing fee has stopped....
i am getting the dividends in US $ so I suppose they are still rogering me for the forex but no fee for the ADR.

also...all the ADR processing transactions as recorded as _SPONSORED ADR AGENCY PROCESSING FEE_.
such as "Vodafone PLC SPONSORED ADR AGENCY PROCESSING FEE"

one last curio....all these agency processing fee transaction are posted and unposted a couple of times.
it is like they are trying to figure out what's the correct amount.
they post, then retract, then post a different amount, then retract, and then finally post the last amount.
like trial and error.
for that reason each dividend payment for me is like 6 transactions total and I had to +/- all of them to figure out exactly how much I actually got.

and this is for every single ADR, semi annually.
go figure


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## Toronto.gal (Jan 8, 2010)

livewell said:


> at TDW and I am charged a fee with...For SAN it was ~0.27 cents a share...


Seems like you selected option 2: selling your rights on market, which incurs a brokerage commission & no withholding tax.

I selected option 1: receive full shares/cash for fractional share/pay no withholding tax, so I just increase my # of shares every Q.


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## warp (Sep 4, 2010)

I have never heard of this.

I am always struck by the fact that every brokerage has some good points, but none seem have everything you would want in one place.

I own Telefonica, and was told by my broker that they do not allow for the scrip dividend, and in fact do not have drips for US stocks at all.

By the way, to correct a point made earlier, Telefonica suspended their dividend for one year, but did pay a div in 2013..and will into the future.


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## Toronto.gal (Jan 8, 2010)

warp said:


> told by my broker that they do not have drips for US stocks at all.


BMO, right?

They don't have drips for even some Canadian stocks. I know for a fact that BMO does not drip certain stocks that I do drip with CIBC. 

I also get the SAN scrip dividend, ie: shares.

As you said, there are good/bad points with every broker.


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## canadian_investor (Jul 4, 2011)

regarding telefonica, i sold because i was fed up with all the fees and the withholding taxes.

i wonder if this has anything to do with questrade being an ECN brokerage.
none of the big bank brokerages charge ECN fees but questreade does.
questrade couldn't do the scrip dividend but all the big bank ones seemed to be able to do it.
anyone with interactive brokers can confirm if they have ADRs whether they are being chared a fee for the dividends?


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## livewell (Dec 1, 2013)

humble_pie said:


> i am fixated w horror. Just looking at SAN, does that mean that for every 100 shares you will pay a fee of $27? omg please tell me i'm wrong! not twenty-seven dollars fee to obtain one dividend payment for 100 measley shares!


No its not that bad only 0.27 cents a share not $0.27. Even so it adds up, on 4100 shares it was $11.10 fee, but SAN is yielding ~9% so it was $11 out of a juicy $932 dividend.



Toronto.gal said:


> Seems like you selected option 2: selling your rights on market, which incurs a brokerage commission & no withholding tax.
> 
> I selected option 1: receive full shares/cash for fractional share/pay no withholding tax, so I just increase my # of shares every Q.


Correct, I have done pretty well on SAN doubling down several times and have got some good capital gain in addition to the juicy dividend, but I do not want to grow this position any more (I sold a bit of it a few weeks ago as it was getting too big).


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## humble_pie (Jun 7, 2009)

canadian_investor said:


> i wonder if this has anything to do with questrade being an ECN brokerage



mea culpa, mea culpa. I inquired at tddi & was told that ADRs frequently do have fees, these are always charged by the transfer agents, clients frequently ask the broker about these fees.

so the charging of fees by questrade appears to be typical, not an anomaly.

People have to research their ADRs really well before they buy them, the tddi representative said.

although finding out about transfer fees is a supremely daunting challenge, i believe, let alone finding out which brokers can receive ADR dividends as scrip that's free of withholding tax from the host country.

with respect to telefonica, i had shares myself, i chose the option to receive additional shares, these arrived perfectly, as i recall there certainly were fees.

interestingly, this thread has revealed a big repertoire of different ADR treatment options by different brokers. As warp & t.gal point out, there is no one-size broker fits all.

afaik there is no handbook or website or directory with consolidated information about transfer agent fees on ADRs.

canadian investor, i'm wondering if it consoles you at all to think that you might not be paying any british NR withholding tax on your british ADRs? seen in this light, fees on the dividends might appear to be somewhat tolerable? especially if the security is being held in a tax-free or tax-deferred account?


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## Toronto.gal (Jan 8, 2010)

humble_pie said:


> 1. although finding out about transfer fees is a supremely daunting challenge, i believe, let alone *finding out which brokers can receive ADR dividends as scrip that's free of withholding tax from the host country.*
> 
> 2. with respect to telefonica, i had shares myself, i chose the option to receive additional shares, these arrived perfectly, *as i recall there certainly were fees*.


*1.* Yes, for sure it can be challenging finding answers sometimes. I usually start with the company's website, then I confirm things with the broker. 

The SAN options were clearly explained in the letter & information booklet that we receive periodically, as well as on their website. As a matter of fact, I never had to complete any election forms even, as receiving shares is/was the automatic default, ie: option 1.
http://www.santander.com/csgs/Satel...hareholders-US/Santander-Scrip-Dividend.html#

*2.* Are you sure you paid fees? I'm just curious because if you were given an election, it means you had no choice but select something, and the share buying would have been the default option, like SAN.


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## humble_pie (Jun 7, 2009)

Toronto.gal said:


> Are you sure you paid fees? I'm just curious because if you were given an election, it means you had no choice but select something, and the share buying would have been the default option, like SAN.



it appears to have been one fee for 13 TEF scrip shares. On 15 june/12 they were delivered to account, which was debited an *admin fee* of $12.53. I noticed the fee but would not have questioned it, since the amount in actual $$ was so small.

as u know the tef stock dividend was a rare event. TEF has not paid since. If such charges were going on constantly i'd have a different attitude. The other 2 ADRs i possess don't pay any dividends , so no need to worry about dividend admin fees on those.

your additional shares that result from SAN scrip appear to be a parallel situation, n'est ce pas? would you be able to mention whether cibc does or does not apply an admin fee to each new delivery of SAN shares from scrip? 

of course, this will not mean that there is-or-is-not-or-was-or-was-not-a-transfer-agent-fee-for-telefonica-because-santander-after-all-is-not-telefonica, right?

all in all i think atrpdocbiz has the right idea. Avoid dividend paying stocks. Especially foreign dividend paying stocks. Always fear Greeks. Especially Greeks who want to give you wooden horses. When you're in Troy.


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## canadian_investor (Jul 4, 2011)

i managed to cut out a picture of the screen that shows the number of transactions happening each time there is a dividend.
it is crazy.
they post and retract multiple taxes and fees each time
just look at this. 6 transactions for 1 dividend.









_@humble_pie_ these are in a registered RSP account. there is no withholding tax for British ADR right.
i clearly remember there were similar fees on my Tef dividend back in 2012.
thus far i have been using my RSP account to accumulate dividend paying ADRs from around the world and now the costs are adding up :crushed:

one more thing....the fee does not seem to be # of shares based but amount based.
that is why they posted $7.50 first, then retracted it, and then posted $6.


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## londoncalling (Sep 17, 2011)

Here is a reference to the TEF dividend processing, scrip for some cash for others debacle of 2012 
:smiley_simmons:


http://canadianmoneyforum.com/showt...elecom-stock-picks/page2?highlight=telefonica

Cheers


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## Toronto.gal (Jan 8, 2010)

humble_pie said:


> 1. would you be able to mention whether *cibc does or does not apply an admin fee* to each new delivery of SAN shares from scrip?
> 2. *Avoid dividend paying stocks.* Especially foreign dividend paying stocks. Always fear Greeks. Especially Greeks who want to give you wooden horses. When you're in Troy.


*1.* No admin. fee from cibc, just the transfer agent's issuance fee of $0.035 per ADR. SAN has a very interesting conversion ratio of AxB:C, which this month translated into 1 share per 43 held ADRs. 

*2.* I have those as well, but you know that I'm a big DRIP fan, too. :wink:


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## humble_pie (Jun 7, 2009)

yes that (the jpeg) is pretty amazing.

the way i see it, the end result seems logical. You received a cash dividend of USD 86.73 on 29 jan/14. Presumably this was net of a NR withholding tax. Account shows 2 other entries for this dividend - presumably in the gross amount before NR was taken out - which cancel each other out.

2 small entries named Z$ADR which cancel each other out plus a final Z thingy debit which leaves you with a net USD 6.00 charge, one assumes for the dividend.

i agree it's awkward-looking but i'd imagine this is due to the broker's particular interface. The same interface that made it impossible for them to accept the TEF stock dividend. In all cases the most important thing is that they got the right money into the right account & they charged the right fees, would you not say.

as you can see from this interesting & quirky little thread, all sorts of exotic problems abound with foreign ADRs at all the brokers. I for one doubt there's going to be any perfect solution anywhere. Yes you could move rrsp to cibc, which sounds as if the interface is better built ... but then you'd have to contend with rrsp being reported entirely in canadian dollars ... this is a presentation which can also drive some people batty ... questrade, where you are right now, has long been famous for its dual-currency USD rrsp.

what i think is excellent here is that you have managed to build up a nice-looking portfolio that is globally based & has good international exposure. Now perhaps might be a good time to move a little more into canadian & US stocks that don't have these quirky fees?

if you would still be a strong believer in europe, there are several european etfs which can give you that exposure while not saddling you with so much dividend trivia.


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## warp (Sep 4, 2010)

There is just no way to get all the good features at one brokerage.

A few years ago, I had accounts split at several, and received around 28 T-5's etc, which was such a pain at tax time.

I am now settled at one brokerage, and even though I can't get everything I want , I stay because the service has always been top notch.


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## livewell (Dec 1, 2013)

humble_pie said:


> afaik there is no handbook or website or directory with consolidated information about transfer agent fees on ADRs.
> 
> canadian investor, i'm wondering if it consoles you at all to think that you might not be paying any british NR withholding tax on your british ADRs? seen in this light, fees on the dividends might appear to be somewhat tolerable? especially if the security is being held in a tax-free or tax-deferred account?


As stated previously British ADR's do not have a withholding tax, but for those that do eg. Spain note that withholding tax is still deducted in an RRSP. A Canadian tax-deferred account does not defer this tax at any brokerage (It is a tax levied by the originating country.)

A list of withholding taxes by country is maintained here http://www.stoxx.com/indices/taxes.html (I would not want to buy an Australian ADR 30% ouch..)


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## Toronto.gal (Jan 8, 2010)

livewell said:


> (I would not want to buy an Australian ADR 30% ouch..)


Depends whether the dividends paid are fully franked or not, if franked, they are exempt from Australian withholding taxes. 

I receive BHP dividends in full. 

So, if you're interested in Australian stocks, find out first whether they pay fully/partly franked, or unfranked dividends.

http://www.investopedia.com/terms/f/frankeddividend.asp


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## JimmyAAA (Mar 28, 2011)

I just checked and GlaxoSmithKline has never had a ADR fee in my Questrade RRSP. There is not even a hidden fee. The amount the GSK site states I should get was actually exceeded. GSK said I should get US$48.80 and I received US$49.29.

I have paid the TEF fee numerous times, but was not charged it with their recent reinstated November dividend. I was still charged the Withholding tax.


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## livewell (Dec 1, 2013)

Toronto.gal said:


> Depends whether the dividends paid are fully franked or not, if franked, they are exempt from Australian withholding taxes.
> 
> I receive BHP dividends in full.
> 
> ...


 I picked Australia at random as one country with high taxes, I could have picked Switzerland @35%! Just shows how complicated these foreign stocks can be. Never looked at Australian stocks figured they are too similar to Canada being primary resourced focused.

For anyone interested in foreign stocks that trade on US exchanges, this site gives a (complete?) list of stocks by country 
http://topforeignstocks.com/foreign-adrs-list/

Buyer beware of withholding taxes, dividend fees, SCRIP dividend options, franked/unfranked dividend issues ;-)


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## londoncalling (Sep 17, 2011)

I went back and did some math on the Nov TEF dividend. The ADR processing fee was hidden in my payment and is less than a penny a share. What it equates to is a 23% withholding tax instead of 21%. 

.471 USD div
.09891 21% withholding tax
_________

.37209 after witholding
.3624 USD deposited to account
_________
.00969 difference

Not transparent but I have seen bigger heists. Mutual fund MER for example.
What I do find odd is I was charged the fee while another client was not. Is there an error in my math? Did I miss something?
Cheers.


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## Toronto.gal (Jan 8, 2010)

livewell said:


> 1. *Never looked at Australian stocks* figured they are too similar to Canada being primary resourced focused.
> 2. *Buyer beware* of withholding taxes, dividend fees, SCRIP dividend options, franked/unfranked dividend issues ;-)


*1.* For long-term investments, I like the biggest of everything/duopolies/monopolies, etc. 

Australia is the biggest mining resources supplier for key countries like China. You know what they say about location, location, location.
*
2.* Indeed! No way to get bored if you do the research involved. :smile:


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## humble_pie (Jun 7, 2009)

londoncalling said:


> I went back and did some math on the Nov TEF dividend.


london my TEF div figs are worse

being the TD, all figs are set forth in CAD in a registered account, although the NR & the processing fee are shown as separate items.

net in CAD, i received .37384615 but the big green had used FX fee rate of 1.0625 that month, ie .941176 to convert back into USD. At that rate my poor little TEF dividend nets out to only USD .35185 per share.

my plan going forward: accept NR-wd-tax-broker-transfer-agent shenanigans as a fact of life with all ADRs. Do the best i can to figure out glitches in advance. After that, if shanghai'd by the system in spite of best efforts, ignore.


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## londoncalling (Sep 17, 2011)

HP: you will make up the difference and then some with your mastery of options and trading :encouragement: :tongue-new:

I agree with the consensus opinion that there is not a single broker that offers it all. My regret is that all these little fee incongruences also lack transparency. I don't mind being charged, what I dislike is being left in the dark. :mask:

Cheers


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