# Converting USD to CAD - using TDW and DLR/DLR.U



## msimms (Apr 17, 2009)

Hi All,

I'm a user of TD Waterhouse with some US dollars sitting in a non-rrsp US Dollar trading account. 
I want to covert the USD over to Canadian Dollars using the DLR/DLR.U technique posted on CanadianCapitalist's website, 

How do I properly convert the US currency to Canadian currency using my TD Waterhouse non-rrsp account? 

Should I: 
1) Log into WebBroker, and select my US Brokerage Account
2) From the US Brokerage Account, Purchase the DLR.U from the "CA - Canadian market" using my US dollars?
3) Call TD and ask them to journal the DLR.U entry over to the Canadian Account
4) Wait for the DLR.U/DLR, (whatever the entry ends up changing to) to migrate and settle over to the Canadian Brokerage account.
5) Sell the DLR.U/DLR from the Canadian Brokerage Account, cross fingers and hope the funds settle in Canadian dollars?

please advise. 

Thanks!
Matt


----------



## jerryhung (Mar 28, 2011)

Norbert's gambit 

You can also do it with other big/fast tickers RY, TD, RIM, MFC, etc..

More to read here
http://www.financialwebring.org/for...id=c5ccd3f79a337f520ac1fba32ffd014e&start=575

Probably easiler if you call into TDW and find a rep to do it over the phone


----------



## CanadianCapitalist (Mar 31, 2009)

I haven't converted USD into CAD myself but the process you've outlined is correct. Be sure to buy DLR.U in your USD Investment Account, journal over and sell DLR in your CAD Investment account. I've done the reverse transactions a couple of times and it works as advertised.


----------



## msimms (Apr 17, 2009)

Great - thanks! I'll give it a try. and if it doesn't work I'll post here.


----------



## CanadianCapitalist (Mar 31, 2009)

msimms said:


> Great - thanks! I'll give it a try. and if it doesn't work I'll post here.


If it doesn't work, don't tell me! 

Seriously though, double check everything before putting in an order. A potential pitfall I can see is selling DLR.U in the CAD Investment account. Make sure you do sell DLR in the CAD Investment account.


----------



## larry81 (Nov 22, 2010)

CanadianCapitalist said:


> I haven't converted USD into CAD myself but the process you've outlined is correct. Be sure to buy DLR.U in your USD Investment Account, journal over and sell DLR in your CAD Investment account. I've done the reverse transactions a couple of times and it works as advertised.


can you post a 'step-by-step' guide of converting cad to usd for TDWH client ?


----------



## CanadianCapitalist (Mar 31, 2009)

I have it on my blog. Let me know if you have any questions...

http://www.canadiancapitalist.com/a-foolproof-method-to-convert-canadian-dollars-into-us-dollars/


----------



## msimms (Apr 17, 2009)

the journalling over by TDW staff of DLR.U from the US account to the Canadian account was completely painless, no resistance or questions asked and it took about 3 minutes total. Sweet.


----------



## msimms (Apr 17, 2009)

A few days after selling DLR from my Canadian cash account, I could still see a 0 quantity amount for the DLR security listed in the account. I also found pulling the money out of WebBroker from Easyweb always resulted in an 'insufficient cash' error. A Workaround was to push the money from the WebBroker into the Easyweb account. So for some reason I could not pull the money from EasyWeb, i had to push the money from WebBroker to get at it. 
This all happened on the 3rd day after the sale of DLR took place.


----------



## CanadianCapitalist (Mar 31, 2009)

Good to hear the DLR gambit worked for you. I don't recall ever trying to transfer money through EasyWeb, so I don't know if this will be an issue for me.


----------



## larry81 (Nov 22, 2010)

CanadianCapitalist said:


> I have it on my blog. Let me know if you have any questions...
> 
> http://www.canadiancapitalist.com/a-foolproof-method-to-convert-canadian-dollars-into-us-dollars/


So just to make sure i understand correctly



> 1. Get a quote on DLR after logging in to your discount broker. Make sure that the bid-ask spread is 2 cents.
> 2. Since DLR has very low volume put in a limit order at the current ask price.
> 3. Wait for the trade to settle (T+3 days). Call your discount broker to journal DLR to your US investment account.
> 4. Wait 2 business days for the shares to get journaled over.
> ...


Just to make sure i understand correctly, what is the actual SALE operation performed after the journalling to the USD account, how it is configured in WebBroker ? A sell limit order at the current bid for DLR.U ?

I am planning my first DLR/DLR.U conversion this week !


----------



## CanadianCapitalist (Mar 31, 2009)

larry81 said:


> Just to make sure i understand correctly, what is the actual SALE operation performed after the journalling to the USD account, how it is configured in WebBroker ? A sell limit order at the current bid for DLR.U ?
> 
> I am planning my first DLR/DLR.U conversion this week !


Actually after journaling over to the USD side holding is still DLR. But Webbroker allows you to sell DLR.U at $9.99 (the typical bid price).


----------



## atrp2biz (Sep 22, 2010)

I'm not sold on DLR as I think there is too much slippage.

The slippage for the bid when selling and the ask when buying would total $0.02 at approximately $10.00 per share. This equates to .02/10 = 20 pips.

When I look for NG, I look for these two factors:

1) high stock price
2) low bid/ask spread

For high volume stocks like RIM, POT, ABX, the slippage is still $.02, but the denominator is much larger. With a $50 underlying, the sliipage is only 4 pips. Even if you increase the slippage to $.08 (due to volatility or decreased liquidity), it would still be better than DLR.

The liquidity for DLR is great, but the total slippage is still high due to the relatively low underlying price.


----------



## andrewf (Mar 1, 2010)

^ Risk with DLR is much, much lower than with, say, RIM/RIMM. Not sure that slightly smaller slippage is worth that extra risk.


----------



## CanadianCapitalist (Mar 31, 2009)

I agree that gambitting with DLR could be more expensive than with liquid stocks.

A buddy of mine gambitted with RIM at TD Waterhouse. Purchased RIM.TO and called in to do a journal and sell but was told that journaling can only be done after the trade is settled. Had to wait one week. The guy lucked out because RIM went up quite a bit during the holding period but the story could well have had the opposite outcome.

Even if TDW agrees to journal and sell, seconds after buying, they sometimes charge phone commissions. That changes the economics of the gambit quite a bit.


----------



## NorthernRaven (Aug 4, 2010)

atrp2biz said:


> I'm not sold on DLR as I think there is too much slippage.
> 
> The slippage for the bid when selling and the ask when buying would total $0.02 at approximately $10.00 per share. This equates to .02/10 = 20 pips.
> 
> ...


I was looking at DLR/DLR.U today, and everytime I took the quotes (from TDW), it seemed to come out competitive with TD stock. The implied conversion rate (CDN Ask / US Bid) was surprisingly similar (POT may have been a couple of basis points better). DLR is supposed to reflect the USD/CAD rate, and the Ask price for DLR did seem to match up with the live currency rates I could find. I'm going to look again tomorrow to see if it was a quirk of a slow trading day in DLR.


----------



## atrp2biz (Sep 22, 2010)

Are you looking at mid-points or the respective bid and asks? I would assume if you looked at the mid-points, the rate would be very similar to spot.


----------



## mustafaupk (Aug 31, 2012)

CanadianCapitalist said:


> I agree that gambitting with DLR could be more expensive than with liquid stocks.
> 
> A buddy of mine gambitted with RIM at TD Waterhouse. Purchased RIM.TO and called in to do a journal and sell but was told that journaling can only be done after the trade is settled. Had to wait one week. The guy lucked out because RIM went up quite a bit during the holding period but the story could well have had the opposite outcome.
> 
> Even if TDW agrees to journal and sell, seconds after buying, they sometimes charge *phone commissions*. That changes the economics of the gambit quite a bit.



The commissions part confused me a bit about this gambit. Should I be calling customer service or their telephone brokerage services to request a journaling of the shares? Sorry for the dumb question but I am planning to convert some USD>CAD and want to do it correctly.


----------

