# CAD to USD Commission at Questrade



## jnorman5 (Aug 21, 2011)

Good morning all,

I am starting to convert my TFSA holdings from e-series to ETFs at Questrade. I contacted Questrade to confirm the commission they charge on CAD to USD funds and the agent stated that they charge a 1.99% commission on all conversions regardless of account (reg or non-reg). I asked if he was certain as I thought registered was 0.5% (from previous threads) but he was adamant that it was 1.99%. Can anyone else confirm what they have been charged in the last few weeks/months as 1.99% takes the allure out of low MER US listed ETFs.

Thanks!


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## avrex (Nov 14, 2010)

I believe the 'automatic' currency exchange fee is now *1.99%.*

See thread, Buying US ETF with Questrade.

I left Questrade in 2012. So, I'll let someone else respond with their more recent experiences.

A cheaper option would be to perform a direct currency conversion (Forex).
The cost would be only 2 pips (2/100th percent).
See Questrade Forex Pricing.


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## humble_pie (Jun 7, 2009)

in a word ... gambit

there's quite a bit to study first. But once you have the tool on your toolbelt, you'll never again in your lifetime pay an FX fee.

search out "gambit" in this forum's archives, or search the internet


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## jnorman5 (Aug 21, 2011)

Hi you two and thanks for the reply.

@HP: Norbert's Gambit doesn't work for me right now due to making monthly contributions for the next year. Unless I am converting over $10K, I am not sure the trading commissions are worth it. Unless I am missing something?

@avrex: Good idea with the currency conversion. Can I do that in a TFSA or would I do that in a Margin account and then transfer to the TFSA? I'm going to go read that thread now!

Thanks again!


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## humble_pie (Jun 7, 2009)

jnorman5 said:


> @HP: Norbert's Gambit doesn't work for me right now due to making monthly contributions for the next year. Unless I am converting over $10K, I am not sure the trading commissions are worth it. Unless I am missing something?
> 
> @avrex: Good idea with the currency conversion. Can I do that in a TFSA or would I do that in a Margin account and then transfer to the TFSA? I'm going to go read that thread now!



ah, but u said upthread you were going to convert (apparently existing) tfsa e-funds to tfsa etfs so i imagined you would do a swack at a crack ... since it's a tax-free account & there are no tax consequences, why not convert a bunch at one time & get it over with?

if u will be making new contributions at intervals from outside the tfsa to those same tfsa-held etfs, you'd have at least 3 choices:

1) gambit the 10k in cash or margin, you're mostly right about the cost benefit kicking in at 10k, then contribute part to tfsa while investing the rest of your brand-new USD in the cash or margin account;

2) locate avrex's special forex rate, if the same still exists;

3) pay the full 1.99%, which i believe is a fairly new questrade tariff.


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## jnorman5 (Aug 21, 2011)

Sorry, HP, should have been more clear. I have $20K between my wife's and mine account currently, but some is locked in under the e-series 90 day min time in to avoid the 2% penalty for early withdrawl. We paid down our house before starting to contribute last year.

I am thinking that I will keep all US ETFs in my account and CAD in hers, so then it is more cost efficient by "gambit"-ing larger amounts. Rather than contribute $3K monthly, I will wait until I have a larger amount and Gambit again so its cost effective. On $10K, assuming $10 commission each trade and a small spread, I should be only paying 30bp for conversion rather than 1.99%.


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## humble_pie (Jun 7, 2009)

ps 1.99% is the highest broker FX rate on record in this forum

means the round trip (the spread) is close to 4% ouch

recently i've stumbled into a huge lacuna at the IIROC. Investors might be steamed that their USD dividends from the Famous 12 - potash, encana, talisman, barrick et al - are being charged concealed FX fees by their brokers when they receive those dividends in canadian account (which is where a normal investor would keep the shares anyhow).

don't be steamed. The IIROC is about to tell me that there are no rules or regulations whatsoever that govern the FX fees that a broker can charge. No rules or regulations, either, that require them to disclose any FX fees they've already charged on statements.

bref it's the wild west. Questrade has leaped to 1.99%, what's next


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## humble_pie (Jun 7, 2009)

sounds like excellent planning, good for you for being mindful to avoid the 90-day minimum hold penalty.

just one tiny detail, the trade commish. If the MI (money involved) were to be 10k, one is talking perhaps 180-200 shares of RY as an interlisted carrier stock? isn't the standard commish at questrade $4.95?

en tout cas, wishing you every good fortune




jnorman5 said:


> ... On $10K, assuming $10 commission each trade and a small spread, I should be only paying 30bp for conversion rather than 1.99%.


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## humble_pie (Jun 7, 2009)

jnorman5 said:


> ... -series to ETFs at Questrade. I contacted Questrade to confirm the commission they charge on CAD to USD funds and the agent stated that they charge a 1.99% commission on all conversions regardless of account (reg or non-reg). I asked if he was certain as I thought registered was 0.5% (from previous threads) but he was adamant that it was 1.99%.



hello, anybody home?

1.99% is a spread of close to 400 basis points on FX conversion. This is the highest FX fee on record at any brokerage in canada, at the present tme.

other brokers are hovering near the 1.50% rate for a one-way transaction, or just under 300 bp for the spread.

it's hard to believe that the forum is content with this?

i imagine it'll be only a matter of time before other brokers leap upwards to the 4% FX spread fee. There are no rules or regulations that govern what FX fees brokers may or may not charge, nor are there any rules that require them to disclose FX transactions on statements.


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## peterk (May 16, 2010)

woaaaa - This is new. Thanks for the heads up. I'm in the process of buying a lot of US equities in my RRSP. Will have to look into this further...

Avrex - Does direct currency conversion just mean depositing to questrade in CDN, then telling the platform to convert with the "exchange funds" feature to USD? If so, that seems pretty darn simple, and the obvious solution. Or are you referring to something more complex to get the 2 pip fee?


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## jnorman5 (Aug 21, 2011)

Just as a follow-up.... I was hoping to do the gambit with an ETF (DLR) so I will only have one commission now vs two (free purchase w/ Questrade). Converting $16K though, I would need over 1500 shares of DLR with typical volumes under 20K/day. Thinking that HPs idea of RY may be better but my fingers are crossed that Questrade can journal same day as I do not like to be tied up to one stock for long...


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## avrex (Nov 14, 2010)

humble_pie said:


> it's hard to believe that the forum is content with this. _i.e. 1.99%_


I agree. no one should be content with this charge.

Anyone thinking about obtaining USD should refer back to, humble_pie's first two options.
1) Gambit.
2) Questrade currency conversion.



peterk said:


> Avrex - Does direct currency conversion just mean depositing to questrade in CDN, then telling the platform to convert with the "exchange funds" feature to USD? If so, that seems pretty darn simple, and the obvious solution. Or are you referring to something more complex to get the 2 pip fee?


Just to be clear. 
My first choice, in my TDW RRSP/TFSA accounts, is to always perform the gambit, to obtain USD.
See USD/CAD dollar conversion, DLR/DLR.U and Gambit sticky notes.


I also have a cash account with Interactive Brokers. 
This is where I perform a direct currency conversion (forex) to obtain USD.
The process at IB is easy and I receive almost the spot rate. i.e. $2.50 + 0.00002% commission.

With that in mind, I noticed that Questrade has what looks like, very cheap conversion currency conversion rates.
See Questrade Forex Pricing. The cost commission cost would be only 0.0002%.

Since, I'm not a client at Questrade anymore, I was hoping that someone else, with Questrade experience, could respond with some details, to assist you, in answering the following questions:
- Can currency conversion be performed in a registered (RRSP/TFSA) account, at Questrade? or in a Questrade cash account only?
- What is the step-by-step process to perform a Questrade forex currency conversion?


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## humble_pie (Jun 7, 2009)

jnorman re gambits, a couple hints if i may ...

if there's any chance a broker will charge a commish per share, gambitters should normally go for an expensive carrier stock. The idea is to use as few shares as possible, ie as low a commish as possible.

thus, if gambitting 16k while being charged per share, td at 182 shares @ 87.80 might mean less commish than ry at 247 shares @ 64.90.

of course, if client has a flat rate commish, so much the better

2) most useful hint: if u are concerned that a questrade agent may or may not journal on time, etc, follow this article. It was written about the TD but the same technique is fine. Prepare both sides of your gambit. Do *not* send the buy order that will launch the cascade. Instead, get everything ready. Contact your agent & check out how the operation looks to be shaping up. Is he going to play good? how fast can he accomplish the journal? is everything going to proceed smooth as glass?

if so, launch the buy. This should be an online order, at low online commish.

the instant he sees that the buy order has been filled, the well-prepared agent will send his sell order. Everything should work out like a dance, an elegant little pas-de-deux. 

if the first agent is out of the loop or somehow not cooperative, no harm has been done because the buy order was never launched. It remains to try again another time, preferably with a different agent.

http://www.canadiancapitalist.com/instant-norbert-gambit-for-all-td-waterhouse-investment-accounts/

EDIT: this protocol was prepared for TD cash & margin accounts. In TD registered accounts, there is no need for human representative contact, orders can stream online instantly, as in buy sell bing bang.

i have never each: ever :biggrin: been able, from questrade clients' posts here in cmf forum, to discern exactly how the questrade trading platform works ... it is also possible that gambits in questrade registered accounts do work differently from/better than gambits in cash or margin accounts ...


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## jnorman5 (Aug 21, 2011)

So I attempted the gambit today and was told by three different traders at the trade desk that new rules were in place and all journal requests had to go through the credit and risk department which will take 2-3 business days??? Sounds like they are starting to crack down on this. I purchased DLR in the meantime due to less risk than with one stock. Now just to wait for the journal and sell DLR.U.

Thanks again for everyone's help!


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## andrewf (Mar 1, 2010)

I was told the same thing. Then I called them and had them journal it over and sell while I was on the line. They even waived the phone commission because it's not possible to sell DLR.u through the IQ interface.


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## jnorman5 (Aug 21, 2011)

When were you told this Andrew? I thought that after three attempts it just wasn't going to happen...


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## Four Pillars (Apr 5, 2009)

Questrade has always had a non-reg forex conversion fee comparable with other brokers. Their registered rate was 0.5% until a couple of years ago which was a bargain. They raised to 0.8% for a bit and then finally realized that most people don't know/care whatever about forex rates so they might as well just charge to the max like everyone else on the block and raised to 1.99% over a year ago.

I'm not sure why brokers don't just charge 5% each way - most people wouldn't notice.

I haven't done any gambiting yet - will report when I do.


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## m3s (Apr 3, 2010)

Hmm... last time I converted funds it was only 0.5%

What about Forex? On IB it's just as easy as making any old trade but it seems that on Questrade I need to install another platform?


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## humble_pie (Jun 7, 2009)

seems like it was only last month CC called for a show n tell on brokers' FX fees ... cmffers were to contact their brokers & post the spread rates as of one specific morning.

it turned out, last month, that most brokers were hovering just below 3% on the spread.

but now they appear to be marching up, up, up towards questrade's highest-FX-rate-on-record of 1.99%, or 3.98 on the spread.

yesterday i bought & sold some US securities at the same time, in a td all-CAD rrsp. There's an autowash feature, so i'll never pay the spread FX rate, but still it was interesting to see the conversion figures being calculated in the registered account.

TD charged 7.15% to buy CAD, 3.95% to sell USD. That's a spread of 3.20%, so it's getting up there near questrade's lofty 3.98 pinnacle.

as for why brokers aren't charging 5% in FX fees, since the crowd allegedly doesn't care? the real question is why would they stop at 5%? why not 14%? 21%? 28%?

the only thing that might be stopping the brokers might be the possibility of charges of collusion & price-fixing under the Competition Act.


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## HaroldCrump (Jun 10, 2009)

humble_pie said:


> as for why brokers aren't charging 5% in FX fees, since the crowd allegedly doesn't care? the real question is why would they stop at 5%? why not 14%? 21%? 28%?


Because they don't want to kill the goose that lays golden eggs.
Why get greedy, they ask themselves.

Let us collude and keep skimming off 3% - 4% off each transaction in perpetuity.
Why ruin it by grabbing 10% or 20% and then someone will notice and raise a stink about it.

Like the story of the cat that ate one mouse every night and none of the rats noticed....


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## Jungle (Feb 17, 2010)

In another thread, a poster claimed you need to call the trade desk for Questrade to journal right away. They will waive the fee. The live chat or csr people will not do this and make you wait three days.


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## humble_pie (Jun 7, 2009)

i'm not a questrade client but those posts from cmffers saying that they've seen "journalled" interlisted stock literally leap from one currency to the opposite currency, on their trading screens, within one hour, do leave me wondering.

stock is not supposed to leave an account until settlement date. Newly purchased stock has to be paid for, before it can be moved. Or not paid for, as the case may be. In which case the account goes short. But even short, the exchanges know exactly where shares are at all times. These rules have applied to all brokers in north America since the dawn of curbside exchanges.

just imagine the chaos if unpaid-for stock starts running around naked short all over the place. The rate of FTDs (failures-to-deliver) would skyrocket. All because a bunch of newly-licensed trading reps with 6 months experience and/or inexperienced back office staff got busy moving unpaid stock into other accounts? i don't think so.

in broker platforms that support instant gambit trading - by now it is transparently evident that questrade's does not - the sold stock appears technically as a short. In fact, it's a kind of naked short cousin. Not a true naked short, because the shares really do exist, they have been bought in the opposite currency & there they are going to sit, for 3 entire days, until settlement occurs.

the instant trading platforms at bmo, roybank & tddi registered accounts are able to recognize such a purchase. They instantly open to allow the naked short cousin in the opposite currency.

in tddi non-registered accounts - & apparently at questrade - certainly also at cibc & scotia ITrade - the software code that will enable the system to recognize that a brand-new purchase of an interlisted stock has been made, is missing. In such accounts, this recognition has to be provided by a human licensed representative. Hence the phone calls, hence the requirement by tddi that gambitters in non-registered accounts pay a full agent-handled commission.

what may have been happening at questrade is that they were appearing to "journal" prematurely. Individual agents seem to have been okaying this on a random haphazard basis, according to many posts here in cmf forum.

but eventually their compliance department appears to have caught up with the mess, or else the CDS system itself caught up with the mess. The result was enforcement of the T plus 3 settlement rule.

at TD, this mess was sorted out 2 or 3 years ago. At no time did the big green ever display or confirm a premature "journal," though. The issue at TD was determining whether & how the big green would honour clients' phoned orders to carry out instant gambits in non-registered accounts. For a time, at TD, some call centres would not accept instant gambit orders.

one cmf forum member played a critical role in negotiating with the big green. The cmffer knew that instant gambits in TD non-registered accounts do require extra work from both licensed reps & from the credit department, which has to be advised to accept the irregular pair of positions for 3 days. The cmffer agreed that clients should therefore pay agent-handled commissions.

a critical point that the cmffer used to persuade TD to cooperate with instant agent-handled gambits was the fact that the strategy is self-limiting. Only the boldest of clients will try it. Many, perhaps the majority of investors, will remain content to pay a broker's ever-escalating foreign exchange fee.

all this took place in 2011. Ever since, gambitting at tddi has gone like clockwork. Countless individuals have been assisted right here in cmf forum, resulting in the savings of many thousands of dollars in FX fees. Not, one might add, that such individuals ever seem particularly grateful!

what would work at questrade is for one individual to deal with this broker as the above-mentioned individual dealt with TD. Such individual should have advanced knowledge of the dilemmas questrade must solve on its trading platform & should also be a good negotiator.


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## andrewf (Mar 1, 2010)

jnorman5 said:


> When were you told this Andrew? I thought that after three attempts it just wasn't going to happen...


I did a gambit back in March, I think.


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## andrewf (Mar 1, 2010)

Jungle said:


> In another thread, a poster claimed you need to call the trade desk for Questrade to journal right away. They will waive the fee. The live chat or csr people will not do this and make you wait three days.


This was my experience (at least with DLR). You can do the buy-side online, then call them and have them sell DLR.u. I ended up taking a market order which is a bit less efficient.


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## jnorman5 (Aug 21, 2011)

Well gambitting is complete and I am quite happy. Based on my numbers, it looks like the entire currency exchange only cost me 16 basis points plus the 9.95 commission... it seems a little low though so I am thinking I may have missed something. Either way, no where near the 1.99% Questrade was offering so I will take it... even if it was 50 bps, I'd be happy :chuncky:


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## andrewf (Mar 1, 2010)

That's pretty good norman. It cost me about 30 bps when I did it.


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