# CAD / USD Stock Settlement Funds



## ions (Mar 23, 2012)

Hello Money Forum,

I have purchased a stock on the US stock market. 80% I settled in CAD settlement Funds (8,000 shares) and 20% in USD settlement Funds (2,000 Shares). My Broker is BMO.

I didn't have any USD so I was charged roughly 2% conversion from CAD to USD $ is my understanding.

1) Suppose I setup a limit order to sell 2,000 shares and pick USD Settlement Funds. Will the BMO system sell the appropriate shares into USD without any further currency conversion fees?

2) Suppose I setup a limit order to sell 5,000 shares and pick CAD Settlement Funds. Will BMO charge me a 2% conversion fee again to settle the US stock back into CAD OR are there no further fees because I initially selected CAD settlement funds on 8,000 shares?

3) Suppose I setup a limit order to sell all the 10,000 stocks and settle in CAD. I will only be charged conversion fees on the 2,000 USD settlement stocks?

Thank you


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## AltaRed (Jun 8, 2009)

1) The stock is a US stock on a US stock exchange and you picked USD for settlement. The cash will stay in USD with no currency effects.
2) You will be charged again because you are selling a USD stock on a US exchange but have selected CAD settlement. It doesn't matter what currency you used to purchase the shares in the first place. That purchase is ancient history.
3) You will be charged conversion on the entire sale of 10,000 shares. It doesn't matter how (what currency) you used to purchase the shares in the first place. That is ancient history.


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## ions (Mar 23, 2012)

Thank you AltaRed. 

This raises another question then. 

4) If I sell all 10,000 stocks into USD Settlement there will be no currency exchange fee, even if 8,000 stocks are designated as CAD settlement at the time of purchase in my account?

OR

Do I need to call my broker before I sell all 10,000 stocks into USD Settlement and ask him to transfer the 8,000 stocks to the USD settlement section of my account.

AltaRed your answer almost implies the Settlement you chose at the time of purchase is irrelevant. If you sell a US stock in to CAD settlement you will be charged currency exchange fees and if you sell into USD settlement you will not be, irregardless of how the stock is bought and organized in my trading account.

Is my understanding correct?

Thank you


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## Ponderling (Mar 1, 2013)

If you do this a lot, look up the DOL etf shuffle as a way to substantially avoid paying your brokers FX charge.

It will require that you have a USD account first. I am with Itrade, and can set up a USD side of my RRSP along side my CAD RRSP, with both having the same account number. Same thing for my non-reg account. I think other institutions allow similar if not identical situations.


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## Numbersman61 (Jan 26, 2015)

It appears that the OP has 8,000 shares sitting in his Canadian $ account and 2,000 shares sitting in his US$ account. He wishes to sell all 10,000 shares. I’m with TD and I’m able to do a self directed online stock transfer from my Canadian$ account to US$ account at no charge. Not sure if this is available at no charge with BMO.


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## Tostig (Nov 18, 2020)

I'm not sure what the OP wants to do. If I'm guessing he (or she) wants to end up with 100% in USD or CAD, then I would recommend that he call BMO Investorline, and request that the shares be journalled over to the other currency. When that's done, then sell and 100% of all the funds will be in one currency with no addition exchange rate fees involved.


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## fireseeker (Jul 24, 2017)

ions said:


> Thank you AltaRed.
> 
> This raises another question then.
> 
> ...


As AltaRed said, the currency you used for your purchase has no bearing on what happens with any sale.

At BMOIL, there are no currency sub-accounts, as there is with other brokers (like TD). Given this is a US security, it will be sitting in your account in USD.

If you choose to sell some or all of your shares, you will have two options:
1) Sell to receive USD
2) Sell to receive CAD

Note that option 2) above is really a request for two separate transactions. The first is to sell the shares on the US market for USD. The second is to convert the USD to CAD. If you do that, BMOIL will indeed charge you another ~2% in foreign exchange fees.

You can, of course, simply sell for USD and then at some point in the future convert some or all of the greenbacks to CAD. This will incur the forex fee.

There are suggestions upthread about using a technique known as Norbert's Gambit to convert the currency much more cheaply. You can learn more about that via the link.


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## AltaRed (Jun 8, 2009)

As Fireseeker just articulated, BMO IL and RBC DI are not like other bank brokerages. They don't have USD and CAD sides to the account. All of the OP's 10000 shares at BMOIL will (hould) be one line item in his account. It is up to him which currency he elects his buy or sell to be settled. If he sells his 10000 US domiciled shares on a US exchange, he can elect the currency in which to settle, either CAD in which case he will be charged a forex fee, or USD in which case he does not get charged anything.


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## AltaRed (Jun 8, 2009)

ions said:


> Thank you AltaRed.
> 
> This raises another question then.
> 
> ...


See my prior post and that of Fireseeker. Your BMOIL account should only show one entry of 10000 shares in your account. Do they not? And do they not have a U designation after this line item and not a C?

Added: Or in the new Investorline2.0 format, a :US or a :CA designation after the trading symbol?


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## Numbersman61 (Jan 26, 2015)

Interesting that BMO does not have provisions for different currency accounts. Some years ago, BMO made a concerted attempt to get me to consider trading with them. I’m happy I stayed with TD.


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## fireseeker (Jul 24, 2017)

Numbersman61 said:


> Interesting that BMO does not have provisions for different currency accounts.


Perhaps this wasn't explained well enough upthread.

BMOIL integrates USD and CAD into a single account. In that account you can do anything you want in whichever currency you want. You can sell a Cdn stock like CTC and ask for the proceeds in USD, if that floats your boat.

This is generally more seamless than what is necessary at, say, TD, because there is no need to "journal" holdings from one sub-account to another.


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## ions (Mar 23, 2012)

I bought the US stock in my BMO TFSA account. There are two line items in my account. 8,000 Shares is one line item and 2,000 shares is a second line item. The lines look identical other than the share count. The BMO agent said he can transfer the shares onto the CAD side or US side for free at my request.

My take away from this is the following: If I use CAD to interact with a US listed stock (either buy or sell) I will be charged a conversion fee.

For now I want to sell into USD as I want to be able to buy and sell some US stocks without conversion fees.

What I don't understand is why do I need to call my BMO agent to place the CAD side onto the US side in my account. If I sell the stock in USD settlement funds I will simply not be charged a conversion fee... so why the need for the call to BMO to journal the CAD side to the US side? I am asking because last time there was a 2 hour waiting period for a BMO agent.

Finally, there is no equivalent of this stock on a Canadian exchange so I can't do the Norbert's Gambit.


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## AltaRed (Jun 8, 2009)

ions said:


> I bought the US stock in my BMO TFSA account. There are two line items in my account. 8,000 Shares is one line item and 2,000 shares is a second line item. The lines look identical other than the share count. The BMO agent said he can transfer the shares onto the CAD side or US side for free at my request.
> 
> My take away from this is the following: If I use CAD to interact with a US listed stock (either buy or sell) I will be charged a conversion fee.
> 
> ...


I have no idea why you would have 2 line listings although I confess to never having done what you have done with your purchases. Maybe because it is a registered account rather than a non-reg account. Nor do I know why you have to call BMO to move it from one side to the other as it should be possible online (but maybe it is not). Seems odd, but in any event, any security can be transferred from one side of the account to the other, i.e. CAD side to USD side, or vice versa without any cost. It is called "journalling".

There is no reason for you to have a US stock on the CAD side of your account. It should always be on the USD side BECAUSE a US stock will generate USD dividends and you don't want the dividends converted to CAD with the forex cost. Keep a US stock on the USD side.

As an aside, there are Cdn stocks that issue USD dividends that should be kept on the USD side of the account so as not to have those USD dividends converted to CAD. I own BAM.A which is a Canadian stock that issues USD dividends. I keep it on the USD side of the account.

To your last question.... You do not need to push this US stock to the USD side of the account if you want to sell it and settle in USD .You simply pick USD as your settlement currency and there is no conversion done But if you keep the stock, you should have it on the USD side anyway to avoid conversion of USD dividends back to CAD. Something to think about.

@Numbersman61: That is precisely the reason to have a BMO IL or a RBC DI account. The accounts are integrated. One can do a Norbert's Gambit with an interlisted stock in seconds.
Example: Buy RY in Toronto and settle in CAD. Sell RY one second later in NY and settle in USD. It does not get simpler than that.


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## fireseeker (Jul 24, 2017)

ions said:


> I bought the US stock in my BMO TFSA account. There are two line items in my account. 8,000 Shares is one line item and 2,000 shares is a second line item. The lines look identical other than the share count. The BMO agent said he can transfer the shares onto the CAD side or US side for free at my request.


Like AltaRed, I'm confused by this. I also use BMOIL.You should be able to sell all 10,000 shares to settle in USD without the assistance of an agent.

Would you care to share the ticker of the stock? Or a screen shot of the two lines?
I'm wondering if there is something unique about this stock.


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## AltaRed (Jun 8, 2009)

fireseeker said:


> Like AltaRed, I'm confused by this. I also use BMOIL.You should be able to sell all 10,000 shares to settle in USD without the assistance of an agent.
> 
> Would you care to share the ticker of the stock? Or a screen shot of the two lines?
> I'm wondering if there is something unique about this stock.


He should be able to put in an order to sell all 10,000 shares on the NYSE with settlement in USD without any 'combining of line items' into one side of the account or the other. AFAIK, the trade box doesn't differentiate on the account. It simply asks for the symbol, for example RY:US for a sale on the US exchange rather than RY:CA on Toronto. BWTFDIK...cause I have never run into 2 line items of the same stock in my account.

More info would be helpful.


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## Tostig (Nov 18, 2020)

fireseeker said:


> Like AltaRed, I'm confused by this. I also use BMOIL.You should be able to sell all 10,000 shares to settle in USD without the assistance of an agent.
> 
> Would you care to share the ticker of the stock? Or a screen shot of the two lines?
> I'm wondering if there is something unique about this stock.


I once bought Google and settled in CAD. When I sold, I had forgotten about that so I had settled in USD. When my holdings showed I had both negative and positive shares of Google telephoned BMO and asked what was going on. That's when the agent reminded me my original purchase was in CAD and not to worry about it as it will be zero-ed out at the end of the day.


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## AltaRed (Jun 8, 2009)

That is a helpful clarification. I forgot to add that point at the end of my post.


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## Numbersman61 (Jan 26, 2015)

AltaRed said:


> I have no idea why you would have 2 line listings although I confess to never having done what you have done with your purchases. Maybe because it is a registered account rather than a non-reg account. Nor do I know why you have to call BMO to move it from one side to the other as it should be possible online (but maybe it is not). Seems odd, but in any event, any security can be transferred from one side of the account to the other, i.e. CAD side to USD side, or vice versa without any cost. It is called "journalling".
> 
> There is no reason for you to have a US stock on the CAD side of your account. It should always be on the USD side BECAUSE a US stock will generate USD dividends and you don't want the dividends converted to CAD with the forex cost. Keep a US stock on the USD side.
> 
> ...


AltaRed - that’s a good point but I have been with TD for too many years and at my age (almost 80), I’m reluctant to change. I only do the instant Norbert’s Gambit for amounts in excess of $100 thousand.


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## AltaRed (Jun 8, 2009)

Numbersman61 said:


> AltaRed - that’s a good point but I have been with TD for too many years and at my age (almost 80), I’m reluctant to change. I only do the instant Norbert’s Gambit for amounts in excess of $100 thousand.


Sure.. I wasn't suggesting anyone change their brokerages. It was the wording of your post "happy that I stayed with TD" that suggested dismissal of BMO as a competitive brokerage as it pertained to the OP's issues. It is actually easier at both BMO IL and RBC DI... even if my main brokerage is Scotia iTrade.


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## Numbersman61 (Jan 26, 2015)

AltaRed, my initial post on this thread was due to confusion by me as to how the different currency accounts were maintained by BMO.


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## ions (Mar 23, 2012)

Thanks for all the responses. My understanding now is that the purpose of the two journal sections (CAD or USD) for a Stock is primarily for Dividend purposes.

The reason for the Settlement Option upon Buying a stock is for unique cases like BAM which is a Canadian Stock but should be settled in the USD journal section because it gives out USD dividends.

The stock I bought is ARBKF (Argo Blockchain) and it is TFSA eligible. It's a Bitcoin Miner sold on the OTC but will be uplisted to NASDAQ soon.

From your responses, I am concluding that I don't need to call my BMO broker if I simply want to sell all my ARBKF and settle into USD which will not incur additional exchange costs.

Thank you


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## AltaRed (Jun 8, 2009)

Numbersman61 said:


> AltaRed, my initial post on this thread was due to confusion by me as to how the different currency accounts were maintained by BMO.


No worries. Continuing off-topic, BMOIL sticks it all together with each line designated by a C (or CA) or a U (or US). They are not in sub-accounts. If I want to hold BAM on the USD side, it shows as BAM:US and if I want to hold BAM.A (same stock, same CUSIP) on the CAD side, it shows as BAM.A:CA

If I hold it as BAM:US, my dividends are issued in USD. If I hold it as BAM.A:CA, the dividends are converted to CAD.

If I want to sell BAM on the TSX, I use symbol BAM.A:CA and if I want to sell it on the NYSE, I use symbol BAM:US.

The RBD DI platform works similarly but their interface is more clear in terms of not working with the CA or US designations. There is a drop down box for the exchange and that is all one needs to select. Spouse has her RRIF at RBC DI so that is how I know about that platform. Neither of those 2 platforms need to have the stock journaled first before selling.

@ions: I can understand where your confusion comes from given how you ended up with 2 line items.


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## ions (Mar 23, 2012)

For me the two lines appear completely the same. See below picture. Also this OTC ticker behaves very strangely. When I first buy it, the ticker ARBKFF appears after the company name with the live stock price on the BMO platform. After the stock settles it appears as shown below (ticker is removed) and the stock price doesn't update, merely stays the previous day price. Also before the stock settles I can sell it instantly. Once it settles I have to wait 1-2 minutes Pending Approval. I am hoping all this will change when it gets uplisted to NASDAQ.


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## AltaRed (Jun 8, 2009)

I have no experience in OTC products and have no idea how BMO handles them.


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## ions (Mar 23, 2012)

Another follow up question. I thought if you hold a US dividend paying stock in your Registered Account (TFSA / RRSP) those dividends are not tax sheltered and will have to be reported to the CRA?


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## Numbersman61 (Jan 26, 2015)

All the income in your TSFA/RRSP is sheltered from Canadian tax. However, the dividends received by your TSFA from US corporations will be subject to IRS withholding tax. Dividends received by your RRSP from US corporations are exempt from IRS withholding tax.


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## Spudd (Oct 11, 2011)

To add to Numbersman's input, the IRS withholding tax is automatically taken off by your broker. There's nothing you need to worry about as far as filing taxes or anything like that.


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## ions (Mar 23, 2012)

Thank you in regards to the information related to US Dividends in a TFSA. What percent is the IRS withholding tax in the TFSA?


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## Ponderling (Mar 1, 2013)

15% is clipped from us divvy payments on US stocks going into a tfsa or non-regisitered account.

Then there are outliers of CDN equities (of companies that usually trade in canada and us), which pay their dividends in US dollars. These dividends are not charged a withholding tax, because the company is Canadian. AS with almost all things finance what could be simple is not always.


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## ions (Mar 23, 2012)

Thank you.


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## ions (Mar 23, 2012)

I would like to summarize the conclusion of USD/CAD settlements and confirm my understanding.

The primary purpose for USD / CAD settlements is for dividend purposes. You can have the US stock journalled on the Canadian Side but if you sell it with USD Settlement it's the same as if the stock was journalled on the US Side and sold in USD Settlement. In both scenarios there will be no foreign exchange fee as long as when you Sell the US stock you choose USD Settlement. 

Additionally, if you sell a US stock with CAD Settlement you will always be charged a foreign exchange fee irregardless of where it is journalled.

Is the above correct?

Thank you


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