# Differences between a stock that trades on both the TSX & NYSE?



## Justin1980 (Feb 23, 2013)

Hey all, hope everyone is having a good week and "enjoying" these few days above zero. 

My question:

Let's consider any stock that trades on both the TSX and on the NYSE: Potash, or Barrick or Bank of Montreal for example. BMO vs BMO.TO

As a Canadian, what sort of advantages, disadvantages, challenges, tax implications etc might be encountered based on an investors choice of exchange they decide to invest in?

For example, are there reasons to hold one or the other in a TFSA, or RRSP or non-registered account, versus the other?

Are there occasions, such as the loonie losing ground against the USD, or perhaps you are ready to sell, that would prompt an investor to move the shares from one account to the other, or to journal the shares to the other exchange?

Small side-question: Does a Canadian company pay dividends in CAD dollars if on TSX and USD if on NYSE _*by rule*_? Or does that vary by company?

A lot of questions, i know. Im still VERY new to the investing world. If the best advice is a link to recommended & related readings, ill be glad to have it, the amount of books im going through is scary...TRYING to go through, hehe 

Thanks in advance fella's.


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## AltaRed (Jun 8, 2009)

Inter-listed stocks with the same CUSIP number are exactly the same stock whether traded in New York or Toronto. My data is probably out of date but there is/was about 55 Canadian stocks that have chosen to list in New York in addition to the Toronto exchange. 

BMO is exactly the same as BMO.TO. It pays its dividends in CAD and the dividend is eligible for the CDN dividend tax credit regardless of whether it was bought in New York or Toronto. Because it pays its dividend in CAD, the stock is best held in your CAD side of your brokerage account.

On the other hand, stocks like Encana and Potash pay their dividends in USD and are thus best held on the USD side of one's brokerage account. The dividend is still eligible for the CDN dividend tax credit.

Where one buys these stocks depends on whether you have CAD or USD with which to buy the stock. Where one sells the stock depends on whether you want CAD or USD when you sell the stock.


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## Eclectic12 (Oct 20, 2010)

If one's TFSA only supports CAD, one wants to avoid American stocks that pay USD dividends or Canadian ones such as Potash in the TFSA as one is likely to be forced to pay currency exchange rates on each dividend payment. If one is DRIPping the dividends, there's likely to be two sets of currency exchanges (one for the dividend payment and one for the share purchase).

Whereas in a taxable account that has both CAD and USD, as mentioned above, one can get the stock recorded under the USD account and avoid the currency exchange.

I think it's up to the company what they want to pay but haven't investigated. 


Cheers


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## P_I (Dec 2, 2011)

AltaRed said:


> Inter-listed stocks with the same CUSIP number are exactly the same stock whether traded in New York or Toronto. My data is probably out of date but there is/was about 55 Canadian stocks that have chosen to list in New York in addition to the Toronto exchange.


Google helps with memory, Interlisted Symbols | TMXmoney


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## Justin1980 (Feb 23, 2013)

Ok great, thanks everyone. So then to clarify:

- If i bought shares in one of these companies using Canadian funds, I could journal it to the NYSE and receive USD upon the sale without any fee's, more of a way to have the currency exchanged for free, (well, not for free, but as a side effect) correct?

- I own Pot.TO in my Questrade TFSA, and when i look at my account activity, i don't see any currency exchanges regarding the dividend. It "appears" im simply receiving Canadian dollars. Do you suspect this is incorrect, and that i am actually being charged currecy exchange fee's that aren't shown? Please see attached photo...


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## Spudd (Oct 11, 2011)

Justin1980 said:


> View attachment 439
> 
> 
> Ok great, thanks everyone. So then to clarify:
> ...


To the first point, yes, that is called "Norbert's Gambit" and it's a good way to get cheap currency exchange.

To the second point, POT pays 35c/share USD in dividends. If you look up how many shares you have, and the exchange rate on that day, you'll be able to calculate if you were charged any forex or if your broker was nice and did the exchange for free.
http://web.tmxmoney.com/quote.php?qm_symbol=POT


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## humble_pie (Jun 7, 2009)

roughly 20 canadian companies do pay their dividends in US dollars so it's important to keep those stocks in a US account. Because if left in CAD account, all the brokers are going to charge FX fees on the dividends.

here's an article with info about this issue, including a list of the companies involved:

http://www.canadiancapitalist.com/category/investing/currency-conversion/

one hears that chez questrade, client should toggle each stock into the currency side of the dividend. 

now to *really* mess things up, i hear from painstaking 100% reliable expert source that, chez questrade, the wretched shares then keep migrating back to the currency side of the original payment. In other words if one buys potash in CAD & toggles POT over to US side of the account in order to receive its USD dividends without FX fee, nevertheless the shares will try to meander back to the original canadian side.

source thinks this is due to seams between questrade's older platform - parts of which they kept - & the new one they built a few years ago. He's taken it up with questrade, they have no solution. As folks like to say, It's a Known Issue.

other brokers don't have this issue & with them it's easier to lock one's shares down into one currency side of an account or the other, in order to receive USD dividends without FX fees.


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## Justin1980 (Feb 23, 2013)

Spudd said:


> To the first point, yes, that is called "Norbert's Gambit" and it's a good way to get cheap currency exchange.
> 
> To the second point, POT pays 35c/share USD in dividends. If you look up how many shares you have, and the exchange rate on that day, you'll be able to calculate if you were charged any forex or if your broker was nice and did the exchange for free.
> http://web.tmxmoney.com/quote.php?qm_symbol=POT


hmmm, so i should have received $58.08, but received $57.36. I emailed them to ask what';s going on.

HP, oh brother, nothing can be easy eh? Lol.


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## humble_pie (Jun 7, 2009)

justin as you say it's not easy although there is one extremely easy way for an investor to deal with FX/dividend issues.

just ignore them. Pay all FX fees on dividends whether disclosed or hidden. Don't ask questions. This is what most canadian investors have always done.

this is what the brokers are counting on. This is how they can go on collecting hidden FX fees without any bother. They won't have to waste time & $$ training their call centre representatives to deal accurately with the issues.

you've already figured out the far more important issue, which is that investor can sell Potash or any other interlisted stock on either canadian or US market, for either CAD or USD proceeds, just as he wishes.

the price he obtains will be 100% clean of FX fees in either currency. Arbs keep the interlisted prices picked to the bone.

such investor should make sure the CUSIP number is the same for both the CAD & USD stock listing. He may also need to move shares into the correct currency account, or the correct currency side of a dual-currency account, ahead of time. To do this, he may have to phone the broker. It's normal to allow 3 days for journalling shares to the opposite currency side, if this is required.


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## Justin1980 (Feb 23, 2013)

Wow that's brutal eh there brother? I read the link you posted and it seems that might be happening to me. I certainly don't see anything speaking of an f/x charge on my dividends, i had no idea. They say ignorance is bliss, and at times it seems true. What a potential headache dealing with these sorts of stocks, i had no idea...


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## humble_pie (Jun 7, 2009)

Justin1980 said:


> Wow that's brutal eh there brother? I read the link you posted and it seems that might be happening to me. I certainly don't see anything speaking of an f/x charge on my dividends, i had no idea. They say ignorance is bliss, and at times it seems true. What a potential headache dealing with these sorts of stocks, i had no idea...



in a way, ignorance is bliss when it comes to FX fees on dividends. 

it's only when investors hold USD dividend-paying stocks for many years, or when they hold USD dividend stocks in registered accounts, that the brokers' stubborn silence along with frequent misinformation given out by untrained front-line personnel become issues.


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## humble_pie (Jun 7, 2009)

Justin1980 said:


> View attachment 439
> 
> 
> - I own Pot.TO in my Questrade TFSA, and when i look at my account activity, i don't see any currency exchanges regarding the dividend. It "appears" im simply receiving Canadian dollars. Do you suspect this is incorrect, and that i am actually being charged currecy exchange fee's that aren't shown? Please see attached photo...



justin out of curiosity i worked out the correct CAD dividend payment based on the info in your account jpeg.

imho you got the bank of canada noon rate on this dividend, than which nothing could be better. It was a perfect exercise.

did i mention upthread that questrade uses record date, not payment date for dividend FX calcs? it's true that other brokers use payment date, but questrade is one that goes by the record date.

in your jpeg, the statement shows both the dividend payment dates & the record dates for this dividend. Record was 16 jan/14. According to bank of canada, noon rate on that date was 1 USD - 1.0926 CAD. Bingo! for your 150 shares, there's your $57.36 CAD, to the penny.

don't use derivative data bases. Use the bank of canada noon rate on its exchange converter. I'd be ok with XE dot com but not really anything else.

there was another thread a while ago which revealed that questrade is delivering USD dividends from canadian companies in registered plans at ultra-beneficial bank of canada rates, with no FX markup of its own. Kudos to them!

in non-registered accounts, though, shareholders of the 20 interlisted canadian companies should take care to hold those shares on USD side of the account ... all non-registered accounts ... all brokers ...


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## Justin1980 (Feb 23, 2013)

Interesting, thanks Hp, so that's all good, then?
QT sent me this today, the last of which seems most of interest, suggesting that Pot might be doing the exchange on their own to all cdn residents perhaps,,,if i read that right?

"You can certainly hold USD in a TFSA however you would need to set your account currency settlement correctly. The three options you can choose for your currency settlement:
1] CAD -> When you have this option we will auto convert any USD to CAD if it enters your account. If you sell a U.S stock, the proceeds will automatically be converted into CAD. Perfect if you only trade Canadian stocks and options in your account. 
2] USD -> When you have this option we will auto convert any currencies in the account to USD. If you sell a U.S stock, it will remain in USD. If you sell a Canadian stock, the proceeds will be converted in USD. Perfect if you trade only US stocks and options.
3] Trade Currency->This last option allows you to hold both CAD and USD in your account at the same time. With this last option, we will not auto convert currencies in your account unless one side goes into a negative balance.
It is best to have it set to trade currency. You can view this through myQuestrade.com > My Account > Account management > Left side currency settlement.

I have found this infrmation on the investors area of the Potash Corp website. " Dividend amounts paid to shareholders resident in Canada are adjusted by the exchange rate applicable on the dividend record date. Dividends are normally paid in February, May, August and November, with record dates normally set approximately three weeks in advance of the payment date. ""


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