# Foreign Exchange Rates at Discount Brokers



## CanadianCapitalist (Mar 31, 2009)

Please post the foreign exchange rates at your discount broker in this thread. I'll kick off with TD Waterhouse. 

July 3, 2013 at 10:30 AM

CAD to USD rate:
1 CAD = 0.93528 USD

USD to CAD rate:
1 USD = 1.03810 CAD or
1 CAD = 0.96329 USD

Therefore, if you convert 1 CAD to USD and then convert the USD back to CAD, you'll have C$0.97091. In other words, *a two-way currency conversion at TD Waterhouse as of July 3, 2013 will cost you 2.91%*.


----------



## dubmac (Jan 9, 2011)

CanadianCapitalist said:


> Please post the foreign exchange rates at your discount broker in this thread. I'll kick off with TD Waterhouse.
> 
> July 3, 2013 at 10:30 AM
> 
> ...


CC- Get this
I'm in Richmond VA right now. I went into a kiosk at the airport to convert 100 cdn to usd. The kiosk charges 10 usd, and with the conversion I would have gotten 79.00 USD from 100 CDN. - what's that - something on the order of 20%! PS - I didn't bother with the exchange - I'll live off my VISA card insteade.


----------



## HaroldCrump (Jun 10, 2009)

CanadianCapitalist said:


> Therefore, if you convert 1 CAD to USD and then convert the USD back to CAD, you'll have C$0.97091. In other words, *a two-way currency conversion at TD Waterhouse as of July 3, 2013 will cost you 2.91%*.


Those are off the posted rates, right?
Are we absolutely certain that the posted rates is what is applied for these surreptitious dividend currency conversions?
I suspect it may be more.

Here is my example for Scotia iTrade from this morning.
Posted Rates:
CAD to USD:
1 CAD = 1.0800 USD

USD to CAD:
1 USD = 1.0225 CAD

However, let us figure out what they are _actually_ using when converting USD dividends in registered accounts.

The most recent USD dividend I received was Talisman Energy on the 28th of June.
For that day, the XE.com rate was 1.0516 CAD per USD.
However, my dividend was converted at the rate of 1.0173.
Therefore a difference of 3.2%.

To be fair, I do not have the posted rates from Scotia iTrade for 28th June.
It could very well have been 1.0173.

For a more reliable test, one must note down the posted rates on a dividend payment date and then compare against the actual rate applied for the dividend in the account.
I wouldn't be surprised of the latter rate is slightly higher, but I could be wrong.

The next USD dividend I have coming up is Agrium on the 18th of July.
I will note the posted rates on that morning, and compare against the actual applied and report back here.


----------



## humble_pie (Jun 7, 2009)

HaroldCrump said:


> For a more reliable test, one must note down the posted rates on a dividend payment date and then compare against the actual rate applied for the dividend in the account.
> I wouldn't be surprised of the latter rate is slightly higher, but I could be wrong.
> 
> The next USD dividend I have coming up is Agrium on the 18th of July.
> I will note the posted rates on that morning, and compare against the actual applied and report back here.



re dividend FX charges, i don't think the broker's posted rate matters.

many brokers are using the FX rate on the dividend payable date, so let's stick with that.

check the Bank of Canada noon rate on that date. This is the purest wholesale exchange rate to be found; XE.com is usually identical but i have a personal fondness for the noon rate.

work out what your USD dividend would have been (USD div per share x your no. of shares) in CAD using the bank of canada noon rate.

the amount by which the broker's actual delivery of US divs in CAD differs from the noon rate is the broker's profit portion of the FX fee.

keep in mind, though, that broker is sharing FX fees with its bank or with its bank affiliate. Let's all keep in mind, too, that broker is entitled to a certain (ideally modest) FX fee for its troubles. Bank of Canada rates are only for giant money-centre banks. Nobody will ever obtain those rates ... save & except ... for gambitters ... who make out like bandits ...

(aside to m3s) questrade is unusual in using a dividend's record date, are u sure about that? anyhow, as best i can make out, u got a good deal.


----------



## Sampson (Apr 3, 2009)

RBC DI.

Posted rate: 
1 USD = 1.0551 CAD

My experience has always been as Harold describes, posted rate never equals actual rate on the transaction. I have followed a couple times and often it ends up being one of the worse rates of the day that they give - so another way to 'hide' extra fees onto consumers. - Previously, when I exchanged simply by transferring funds from CAD to USD account, 1-1.5% would be taken from the 'posted' rate.

Gambit all the way! and don't let them skim off the top of any auto DRIP etc.


----------



## HaroldCrump (Jun 10, 2009)

humble_pie said:


> many brokers are using the FX rate on the dividend payable date, so let's stick with that.
> check the Bank of Canada noon rate on that date. This is the purest wholesale exchange rate to be found; XE.com is usually identical but i have a personal fondness for the noon rate.
> work out what your USD dividend would have been (USD div per share x your no. of shares) in CAD using the bank of canada noon rate.
> the amount by which the broker's actual delivery of US divs in CAD differs from the noon rate is the broker's profit portion of the FX fee.


OK, the net result is still pretty close though.
BOC's noon rate on 6/28 was 1.0512 - just 3 pips off the XE.com rate.
I received 3.2% less in my CAD RRSP account, same as the calculation above.

I am applying the BOC rate from the dividend payment date, not the record date.

A synthetic DRIP'ing of CAD stock held on the TSX exchange that pays USD dividends (the Famous 18) would incur a round trip fee of 6.4%, is that right?


----------



## CanadianCapitalist (Mar 31, 2009)

HaroldCrump said:


> Those are off the posted rates, right?
> Are we absolutely certain that the posted rates is what is applied for these surreptitious dividend currency conversions?
> I suspect it may be more.


Sorry, I should have been clearer. These are not posted rates. The exchange rates in my post are what a client can obtain for an actual conversion of $1,000 CAD at TD Waterhouse this AM and then back to USD. Of course, the rates themselves will fluctuate throughout the day but one hopes that the spreads will give us a good idea on what the actual conversion rates are at different brokers. Harold, what would iTrade charge you for converting $1000 CAD into USD and $1000 USD into CAD?

About dividends. TDW converted dividends on 28/June (dividend payment date) at 1 USD = 1.03200 CAD. Noon rate according to BoC was 1 USD = 1.0512. It appears TDW conversion rate on dividends is much better than iTrade's.


----------



## mrPPincer (Nov 21, 2011)

To find out the hidden currency conversion fees on the $US drips use the BoC closing rate fore the company's dividend payment date.

For CC's question, the topic of this thread, a simple conversion, one way, and back, I see no reason not to use the noon rate of that date as a comparison (if you're checking the brokerages conversion rates after the noon rates have been posted, on that day).

We're talking about two different things here though, apple and oranges
Humble, m3s' dividend was being discussed on a different thread.

His (or her, as the case might be) POT US$ dividend was paid out in CAD$, correctly, at the exact BoC *closing* rate (not the noon rate) without any FX charges from Questrade.

That, however is a separate quetion from what CC was asking, what the FX fees using the combined rates are for a double conversion using the brokerages posted rates (which I believe fluctuate throughout the day anyways, making the noon rate irrelevant in any case).


----------



## mrPPincer (Nov 21, 2011)

CC, the BoC closing rate on June 28 was 1.0518, so they charged you 1.0518 minus 1.03200 which equals CAD $0.0198 per USD* or 1.8825%.

*edit missed a step,
$0.0198CAD divided by $1.0518CAD, equals *1.8825%*, exactly what TDW charged me on the 28th on my $USD Vanguard divys


----------



## HaroldCrump (Jun 10, 2009)

CanadianCapitalist said:


> Harold, what would iTrade charge you for converting $1000 CAD into USD and $1000 USD into CAD?


That information is actually not posted on their website.
Just a lot of mumbo jumbo about forex rates and how they work.
The rates I posted above were from Scotia Bank's website.

I am going to call them and ask today's rates and then we can compare against the BOC noon rate, which should be available right now.


----------



## HaroldCrump (Jun 10, 2009)

OK, here we go: Scotia iTrade's rate (actually, Scotia Capital - SCI) is 1.0340.
BOC noon rate is 1.0530.
Therefore a difference of 1.8% - far more reasonable and acceptable.

Yet, I am certain they are applying a higher rate for dividend conversions.
My guess is that their markup for dividend conversions, over and above the usual spread, is a further 1.5% (3.2% - 1.8%).


----------



## humble_pie (Jun 7, 2009)

HaroldCrump said:


> OK, here we go: Scotia iTrade's rate (actually, Scotia Capital - SCI) is 1.0340.
> BOC noon rate is 1.0530.
> Therefore a difference of 1.8% - far more reasonable and acceptable.
> 
> ...



for tdw i'm getting a spread greater than 3%.

an hour ago, buying 1,000 US at 1.07
selling US & buying 1,000 CAD at 1.038

a few weeks ago, i put 100 barrick shares into canadian account at 2 brokers in order to see what would happen with the dividend payable 17 june/13.

td exchanged at 1.0020. The boc noon rate on that day was 1.0176.

a one-way FX trip would cost north of 1.50% while a round trip is distinctly north of 3%. My goodness, those rates are high.


----------



## HaroldCrump (Jun 10, 2009)

Since I called anyway, I have asked them to open a case to tell me what their spread is over the BOC rate for (specifically) dividend conversions.
Let us see whether they come back with some meaningful answer or just more bafflegab.

I proved to him on the phone how the actual conversion rate applied for my Talisman dividend was substantially higher than both the BOC rate as well as the rate posted on the Scotiabank website.


----------



## andrewf (Mar 1, 2010)

I guess we know the secret to why they offer low commissions. Consumers hate visible fees, and love hidden fees. They may tell you differently but their actions reveal the truth. Ignorance is bliss.


----------



## Sampson (Apr 3, 2009)

We just need to find a stock from the notorious 18 that we all own (at different brokerages) and find out how much we each got in divies.


----------



## HaroldCrump (Jun 10, 2009)

What low commissions? None of the major bank brokerages offer "low" commissions.
TDW and RBC DI starting commission is $29.99 and Scotia iTrade is $24.99.


----------



## humble_pie (Jun 7, 2009)

*not the big green's finest summer*

it's wild how the brokers all seem to be charging different exchange rates, i would have expected more uniformity.

as an experiment, i had put 100 sh ABX in td canadian account & i had also bt 100 ABX in canadian acct at bmo, in order to view & compare how the 2 brokers would treat the barrick US dividend. It was USD .20, paid on 17 june/13.

moneywise, bmo was better for the clients. The bank of canada noon rate was 1.0176. BMO gave 1.008. The big green's rate was 1.0020, for a whopping 1.5670 FX haircut.

but informationwise, tdw did better. They are showing, on the website only but not yet in statements, that a currency conversion did take place. This scrap of information might be enough to cause some clients to drill down deeper.

however the big green doesn't show anything in non-registered statements. All that is visible is the arrival of some canadian dollars, representing a recent dividend from a canadian company. There's still nothing on statements to show that a currency conversion did, in fact, take place.

chez bmo, there is not one single hint that an FX conversion took place. Nothing on website. Nothing on statements.

in other off-topic news, td says it will begin charging $2 per month for paper statements in september. How many statements with the same account number are included in that $2 fee? canadian account? US account? rrsp? tfsa?

seems the "rules" vary from representative to representative It looks like tdw has not thought this through very well, apparently tdw clients who do *not* trade on the website but who phone their orders in or use the telemax system will not be charged for paper statements.

it seems that other clients will be charged per statement mailing envelope, so if your rrsp statement arrives separately from your cash or margin account statement, please check/complain about this.

"Thank goodness i'm going to be on vacation for 3 weeks starting this friday," said one representative, as he explained what he believed are going to be the "rules."

2013 is not going to be tdw's finest summer.


----------



## My Own Advisor (Sep 24, 2012)

@CC,

This would make a great blogpost. I look forward to reading it


----------



## humble_pie (Jun 7, 2009)

CanadianCapitalist said:


> Please post the foreign exchange rates at your discount broker in this thread. I'll kick off with TD Waterhouse.
> 
> July 3, 2013 at 10:30 AM
> 
> ...



strange, but at same broker (tdw) only 2 hours later on the same day i got a quoted spread of 3.20% for a 2-way round trip. 

i posted the rates they quoted me:

- buying 1,000 US at 1.07
- selling US & buying 1,000 CAD at 1.038

the representative happened to advise me that linking through to the bank's own exchange calculator & executing one's own FX exchange for smaller amounts (ie less than $10k) would sometimes realize a slightly better rate. 

i've never observed this in the past - usually broker rates were better than bank rates - but perhaps it's something to think about now.

it's clear that the big green is scouring every nook & cranny to cut costs & increase revenue while not increasing commissions.


----------



## HaroldCrump (Jun 10, 2009)

humble_pie said:


> chez bmo, there is not one single hint that an FX conversion took place. Nothing on website. Nothing on statements.


Ditto for Scotia iTrade.
There is no evidence that any currency conversion took place.
Even the gross amount of the dividend is not shown.

Most phone reps. are not aware of the issue, either (or pretend not to be).
You have to go up the food chain until you find someone that knows _exactly_ what you are talking about.
Then they admit freely, yep, there was a currency conversion and nope, there is no way to avoid that (in a registered account).


----------



## CanadianCapitalist (Mar 31, 2009)

humble_pie said:


> strange, but at same broker (tdw) only 2 hours later on the same day i got a quoted spread of 3.20% for a 2-way round trip.


I guess the spreads are not static but fluctuate. Perhaps, we can split the difference and call the spread as roughly 3 percent.

I ran two checks this morning. 

*TD Waterhouse*
1000 CAD = 936.07 USD
1000 USD = 1037.40 CAD

Spread = 2.89%

*TD Canada Trust*
1000 CAD = 935.63 USD
1000 USD = 1037.20 CAD

Spread = 2.92%


----------



## CanadianCapitalist (Mar 31, 2009)

Can members post the exchange rates they are seeing at their discount brokers? We need just two pieces of information:

How much in USD do you get for converting 1000 CAD?
How much in CAD do you get for converting 1000 USD?


----------



## humble_pie (Jun 7, 2009)

HaroldCrump said:


> Ditto for Scotia iTrade.
> There is no evidence that any currency conversion took place.
> Even the gross amount of the dividend is not shown.
> 
> ...



HC a point to make is that FX fees averaging maybe 1.50% one-way are being charged on the 18 Canadian companies that pay USD dividends in *all* accounts. Cash accounts. Also margin accounts. Also registered rrsp & tfsa accounts.

those 18 companies are household names. Their gazillions of shares are widely held by millions of Canadian shareholders. All shareholders who hold those shares in any/every type of canadian account are getting hit up by all brokers for 1.50% of dividend income.

thinggabboud it. It's a scandal. There's a lot of money at stake for the brokers, because those US-paying dividend companies are so big & so widely held. Companies like barrick, goldcorp, potash, encana, thomson reuters, magna, brookfield ...


----------



## humble_pie (Jun 7, 2009)

CanadianCapitalist said:


> I guess the spreads are not static but fluctuate. Perhaps, we can split the difference and call the spread as roughly 3 percent



yea that 3.20% round-trip yesterday did seem out of line. But the thing was, she was a highly-experienced PA rep.

since all is quoted verbally over the phone, maybe they're making a few little mistakes ...


----------



## humble_pie (Jun 7, 2009)

CanadianCapitalist said:


> Can members post the exchange rates they are seeing at their discount brokers? We need just two pieces of information:
> 
> How much in USD do you get for converting 1000 CAD?
> How much in CAD do you get for converting 1000 USD?




maybe we should organize an official PYBFFXR day/hour ?

at the appointed hour on the appointed day, everybody phone their broker & ask Rate to Buy $1000 USD? Rate to Sell USD & Buy $1000 CAD?

ooh, broker phone systems will crash ...


----------



## HaroldCrump (Jun 10, 2009)

humble_pie said:


> HC a point to make is that FX fees averaging maybe 1.50% one-way are being charged on the 18 Canadian companies that pay USD dividends in *all* accounts. Cash accounts. Also margin accounts. Also registered rrsp & tfsa accounts.


Well, in a non registered account, you can avoid it by holding the stock on the NYSE, instead of the TSX.
Then you buy the stock in USD and get the dividends in USD, but still get the DTC since these are Canadian companies.
Most of the these stocks are cross traded, no? Except maybe a couple of them such as WRI, from your list.

But there is no way around for registered accounts at brokerages that do not offer USD registered accounts (incl. Scotia iTrade).


----------



## brad (May 22, 2009)

dubmac said:


> I'm in Richmond VA right now. I went into a kiosk at the airport to convert 100 cdn to usd. The kiosk charges 10 usd, and with the conversion I would have gotten 79.00 USD from 100 CDN. - what's that - something on the order of 20%! PS - I didn't bother with the exchange - I'll live off my VISA card insteade.


Living off your Visa card won't protect you from bad conversion rates, though, unless you have a US dollar Visa card. Check out the foreign exchange terms of your credit card, it's pretty eye-opening. I have a US dollar credit card that I use when traveling in the US and pay those bills with my US dollar account, which limits the impact.


----------



## Eclectic12 (Oct 20, 2010)

brad said:


> Living off your Visa card won't protect you from bad conversion rates, though, unless you have a US dollar Visa card. Check out the foreign exchange terms of your credit card, it's pretty eye-opening. I have a US dollar credit card that I use when traveling in the US and pay those bills with my US dollar account, which limits the impact.


True ... though it was was shock when I was working in the US to have what was somewhere over $7 USD fee to use an ATM at the office I was working at ... plus the exchange rate ... plus the expected $1.50 Canadian fee for using a non-preferred ATM. When you add it all up, the Visa fee may be small in comparison.

Then too - I'll have to check the charges I put on my Visa in Denver, CO in April but anytime I've checked in the past, my CAD Visa was charging more than I exchanged cash for but it was a reasonable spread.

A USD Visa is likely the best route thought.


BTW - the latest scam at the Denver Outlet mall was that half the stores when swiping the Visa through their machines added "Would you like the store to handle the currency conversion instead of Visa" question. It was defaulted to "yes" so that where one clicked without reading, one was using the store's conversion.

When I checked my Visa charges - guess which rate was the worst of the two? :rolleyes2:


Cheers


----------



## HaroldCrump (Jun 10, 2009)

Eclectic12 said:


> BTW - the latest scam at the Denver Outlet mall was that half the stores when swiping the Visa through their machines added "Would you like the store to handle the currency conversion instead of Visa" question. It was defaulted to "yes" so that where one clicked without reading, one was using the store's conversion.
> When I checked my Visa charges - guess which rate was the worst of the two? :rolleyes2:


This is becoming quite common - I am running into this issue more and more during trips to the US.
IMO, this seems to be specific to retailers and Visa i.e. certain retailers have this "scam" running in association with Visa.

The most obnoxious form of this is Toys R Us where it will reject your Visa card if you select No.
I have tested this twice - once in Florida and once in California.
It seems they want to force you to accept their exchange rate.

However, with American Express, it works fine.
It does not ask for rate conversion and simply swiping your card works.

Therefore, it seems to me that this is something specific to the retailer + Visa.

But at the same time, the conversion rate of Visa is almost always better than that of AmEx.


----------



## humble_pie (Jun 7, 2009)

HaroldCrump said:


> Well, in a non registered account, you can avoid it by holding the stock on the NYSE, instead of the TSX.
> Then you buy the stock in USD and get the dividends in USD, but still get the DTC since these are Canadian companies.
> 
> But there is no way around for registered accounts at brokerages that do not offer USD registered accounts (incl. Scotia iTrade).



yes, investors can hold the 18 companies in non-registered US side of the account but first investors have to know what's going on.

if the broker doesn't tell them that it's FXing the dividends, how will investors know to do anything different.

u are right, investors holding in registered accounts at non-USD rrsp brokers are the least fortunate of all. They have absolutely no choices.

latest rumour is that the big nobs at the brokers have picked up this story that some shareholders in the 18 companies are not happy (i guess they read cmf forum avidly?)

brokers have gone to the 18 companies & asked them to cover all costs of issuing canadian $$ dividends with no FX fees to at least some shareholders who are holding shares in street form at brokers (as nearly all of us are). The issue is being discussed. No further word.

ps one doesn't have to buy the interlisted 18 companies on a US exchange. One can buy in CAD on toronto, then ask broker to journal shares to USD after stock settles. 

surprisingly, one has to instruct broker to journal shares to US side of the account even for bmo USD rrsp, i would suspect for roybank & questrade USD rrsps also. This is because the default locator for the 18 companies is the canadian side of the account.

one last warning. Journalling shares from CAD to USD side of a margin account can affect the overall margin position, so practitioners please pay attention.


----------



## Eclectic12 (Oct 20, 2010)

HaroldCrump said:


> ... The most obnoxious form of this is Toys R Us where it will reject your Visa card if you select No.
> I have tested this twice - once in Florida and once in California.
> It seems they want to force you to accept their exchange rate ...


Weird ... in Denver the first one went through as by the time I figured out what I read and thought about it, the charge had been completed. I left it there as a test to see what the difference was. All other retailers that asked the question, I selected "No" and the transaction went through fine.

I didn't visit Toys R Us though ... :biggrin:


Cheers


----------



## HaroldCrump (Jun 10, 2009)

If you select Yes (the default option) then the charge goes through.
But if you select No, it denied the card (at least at Toys R Us - to be fair, I haven't tested this at other retailers).

Fortunately, not every retailer has on-boarded this scam yet - it seems to be more widespread among cross border chains such as Best Buy and Toys R Us.
I will try out Target next time I am there.
But most other retailers and malls seem to be ok so far.
Therefore, every time I see that FX conversion prompt, I simply cancel the transaction and use AmEx instead.


----------



## m3s (Apr 3, 2010)

The rate available on IB is pretty much a few pips from the BoC rate and constantly refreshing. You could probably throw in a limit order and get BoC rate during the day. I haven't tested this with real funds though and I have no USD dividends in IB


----------



## Sampson (Apr 3, 2009)

humble_pie said:


> yes, investors can hold the 18 companies in non-registered US side of the account but first investors have to know what's going on.


I'm sure that just as many consumers at brokerages that do not have USD-denominated accounts also own US companies that pay divies that automatically get converted.

No double-grab, but still not as open as the brokerages should be. Caveat emptor.


----------



## Sampson (Apr 3, 2009)

HaroldCrump said:


> at least at Toys R Us - to be fair,


Toys R Us had a small glitch in their system a few years ago, don't know if it still works.

You can use gift cards that are filled with CAD in the US and they treat it at par. That was about 2+ years ago, and CAD was under par at the time. I wanted to buy more, but we try to stick to hand-me downs anyway.


----------



## humble_pie (Jun 7, 2009)

why are we talking so much about credit card FX rates when the topic is Foreign Exchange Rates at Discount Brokers


----------



## CanadianCapitalist (Mar 31, 2009)

Looks like there are no takers for checking up foreign exchange rates at different brokers. No need to actually make a transaction. Just look up the rates for converting $1000 CAD into USD and $1000 USD into CAD but don't click the Confirm or Finish button.

This AM's TDW rates:
1000 CAD = 931.62 USD
1000 USD = 1042.30 CAD

Spread = 2.89% (calculated by converting 1000 CAD into 931.62 USD back into 971.02 CAD).


----------



## Sampson (Apr 3, 2009)

CanadianCapitalist said:


> Looks like there are no takers for checking up foreign exchange rates at different brokers.


I was just waiting for someone (CMF) to offer to cover the cost.

This AM's RBC DI rates:
1000 CAD = 938.17 USD 
1000 USD = 1,049.10 CAD

Round trip yields = 984.23
Spread = 1.58%

The big problem is the "approximate". In the time it took me to correct the transaction from $100 conversion to $1000, literally 25 sec or so, the rate had changed by 0.2 basis points. What they actually give you? who knows.


----------



## humble_pie (Jun 7, 2009)

here's the rate at bmo investorline:

buy 1,000 CAD at 1.041
buy 1,000 USD at 1.073

spread seems to be extremely high; tdw is better; sampson's roybank is best so far ...


----------



## HaroldCrump (Jun 10, 2009)

Scotia iTrade rate as of 12:25 pm : 1.0780 per CAD
BOC noon rate :1.0568

Spread : 2%


----------



## CanadianCapitalist (Mar 31, 2009)

Sampson said:


> I was just waiting for someone (CMF) to offer to cover the cost.
> 
> This AM's RBC DI rates:
> 1000 CAD = 938.17 USD
> ...


Thank you very much Sampson. Hopefully just checking the rates was free, so I'll be happy to cover the cost 

You are absolutely right that by the time you check the second conversion, the rates might have changed somewhat. The couple of times I rechecked the numbers with TDW, the rates had changed by a dime or two on a $1,000 conversion. That's only 1 or 2 basis points, which is rounding error.

Here's a bunch of quotes all spaced one minute apart. As you can see, the conversion rates do not usually change very much within a short span of time.
1000 CAD = 931.62 USD
1000 CAD = 931.71 USD
1000 CAD = 931.53 USD
1000 CAD = 931.53 USD


----------



## CanadianCapitalist (Mar 31, 2009)

humble_pie said:


> here's the rate at bmo investorline:
> 
> buy 1,000 CAD at 1.041
> buy 1,000 USD at 1.073
> ...


So, at BMO we get, 1000 CAD = 931.96 CAD = 970.17 CAD, which is similar to TD Waterhouse's rate.

RBC DI definitely seems to be the clear winner so far.


----------



## CanadianCapitalist (Mar 31, 2009)

HaroldCrump said:


> Scotia iTrade rate as of 12:25 pm : 1.0780 per CAD
> BOC noon rate :1.0568
> 
> Spread : 2%


That's the buy rate for USD, right Harold? Do you also have the sell rate for USD at the same time? It does look like iTrade's exchange spread is the highest so far but we'd only know that for sure when we look at the spread.


----------



## andrewf (Mar 1, 2010)

Questrade doesn't quote their FX spread (anywhere I could find) and they don't quote it when you convert money. I initiated a $100 cad to USD conversion and I'll see what kind of rate I get. You could probably just email them and ask what their spread is.


----------



## humble_pie (Jun 7, 2009)

HaroldCrump said:


> Scotia iTrade rate as of 12:25 pm : 1.0780 per CAD
> BOC noon rate :1.0568
> 
> Spread : 2%



HC i'm pretty sure the spread we're after is between broker's round-trip spread rates, ie the spread between buying USD or CAD from CAD or USD respectively; & then doing the opposite.

the bank of canada noon rate would always be hovering somewhere in the middle ...

the intra-broker spreads we're seeing are so high! it wasn't so long ago tdw had a round-trip spread of 1.90%. This for many years. Now they've gone up to near 3% for small amounts under 10k, such as the $1000 example CC is using.

i am told that spread rates for larger amounts - ie 100k & up - haven't changed in years. It's only the smaller amounts that are getting hit quite badly.

one can see how sneaky the brokers are being. All kinds of dividends are getting hit, for a variety of different reasons. Dividends are usually small amounts, so the max FX fee rate always applies.

while on the topic of ranting at brokers' FX, here's another angle that hasn't been discussed in cmf forum:

- dividends arrive at brokers from the CDS system in bulk. All of the dividends due to a particular broker's clients, according to the record date tally, will arrive in one bulk amount. It's up to the broker to divide & distribute this amount into the different client accounts that are entitled to receive the dividend.

- when the bulk dividend amount is large - as it is for popular stocks that are widely held - the broker is able to exchange that single bulk amount at a favourable rate. 

- broker then turns around & allocates pieces of that bulk amount, now in CAD, into the different beneficial accounts. Since the individual dividend amounts are small, broker gets to charge the clients a higher FX rate than it actually had to pay itself.

just mentioning. I haven't taken up this particular issue because it's already the subject of a class action lawsuit.


----------



## HaroldCrump (Jun 10, 2009)

OK, here we go as of this minute.
USD to CAD : 1.0390 (i.e. $1,000 USD will yield $1,039 CAD)
CAD to USD : 1.0780 (i.e. $1,039 CAD will yield $963.82 USD)

Therefore, round trip haircut is 3.61%


----------



## humble_pie (Jun 7, 2009)

3.61% ??

that's crazy. I don't mean the way the kids say crazy. I mean old-fashioned nutbar crazy. C'est dingue.


----------



## HaroldCrump (Jun 10, 2009)

We seem to have the highest rates of everything - mutual fund MERs, telecom fees, and now evidence of forex rates.


----------



## CanadianCapitalist (Mar 31, 2009)

HaroldCrump said:


> Therefore, round trip haircut is 3.61%


Ouch. Ouch. Ouch.


----------



## mrPPincer (Nov 21, 2011)

CanadianCapitalist said:


> Looks like there are no takers for checking up foreign exchange rates at different brokers. No need to actually make a transaction. Just look up the rates for converting $1000 CAD into USD and $1000 USD into CAD but don't click the Confirm or Finish button.


CC, I'm using TDW but I do have an inactive account with Virtual Brokers.

I will make a point of digging up an old password and seeing if I can log in when I have some time this weekend, unless someone else could provide some numbers from VB before I do.

One slight snag might be that I did not agree to the user agreement for their trading platform because the terms were ridiculous imho, so we'll see if I can access their FX rates or not, they may even have a different trading platform by now for all I know.


----------



## CanadianCapitalist (Mar 31, 2009)

mrPPincer said:


> CC, I'm using TDW but I do have an inactive account with Virtual Brokers.


Kind of you but I wouldn't go to extra trouble. If you can get this data readily, it is great. Otherwise, don't worry.


----------



## m3s (Apr 3, 2010)

andrewf said:


> Questrade doesn't quote their FX spread (anywhere I could find) and they don't quote it when you convert money. I initiated a $100 cad to USD conversion and I'll see what kind of rate I get. You could probably just email them and ask what their spread is.


It's supposed to be 1% in RRSP and TFSA (0.5% fee). But yea.. no quotes so who knows without testing it.


----------



## Sampson (Apr 3, 2009)

CanadianCapitalist said:


> Thank you very much Sampson. Hopefully just checking the rates was free, so I'll be happy to cover the cost


Invoice is in the mail.


----------



## Sampson (Apr 3, 2009)

CanadianCapitalist said:


> RBC DI definitely seems to be the clear winner so far.


Don't be so quick to applaud RBC.

As I mentioned in an earlier post, RBC clearly lists "approximate". When I used to do one-way transfers, the actual cost was not what is reported in the screenshot before hitting the GO button, so I do believe they do a little trickery behind the scenes and actually give you a worse deal.

The spread at RBC is also inversely proportional to the amount exchanged. Small amounts, below $5000, had charges in the 1-1.5% range. Larger sums were typically close to flat 1% rates.

Obviously round trips would be double.


----------



## CanadianCapitalist (Mar 31, 2009)

Sampson said:


> Don't be so quick to applaud RBC.
> 
> As I mentioned in an earlier post, RBC clearly lists "approximate". When I used to do one-way transfers, the actual cost was not what is reported in the screenshot before hitting the GO button, so I do believe they do a little trickery behind the scenes and actually give you a worse deal.


It's a bit strange that RBC wouldn't tell a client the exact rate *before* doing an exchange. At TDW, the rate is displayed right there on the screen along with a note saying that it is valid for one minute.


----------



## HaroldCrump (Jun 10, 2009)

Scotia iTrade also has this "approximate" rate warning on the trade execution screen.
The precise wording is as follows:

_Warning! This trade will be converted to the currency of your account.
Currency conversion done on this page uses indicative F/X rates that may not match the rates used for statement valuations or the final F/X rate applied to any transactions.

We act as principal in currency conversion transactions. Scotia Capital Inc. and related parties apply discretionary conversion rates and may earn revenue on the spread between the bid and ask prices and our cost of the currency. Conversion of currency will take place on trade date._


----------



## Sampson (Apr 3, 2009)

CanadianCapitalist said:


> It's a bit strange that RBC wouldn't tell a client the exact rate *before* doing an exchange. At TDW, the rate is displayed right there on the screen along with a note saying that it is valid for one minute.


Rate is definitely not held. I suppose the approximate might mean that you get the spot rate, but they can only display the rate when you last clicked for update?


----------



## Sampson (Apr 3, 2009)

HaroldCrump said:


> and may earn revenue on the spread between the bid and ask prices and our cost of the currency. Conversion of currency will take place on trade date.[/I]


This is exactly what RBC does, but they certainly don't state it opened like this.

The one time you will get a 'locked-in' rate is over the telephone. Even with transfers of USD equity into an RRSP, for reporting purposes, they give your the exact amount that will be sent to the CRA.


----------



## Jaberwock (Aug 22, 2012)

If you do a lot of trading in US dollars, or have a need to exchange US dollars (or any other major currency) on a regular basis, the best way is to open an account with Interactive Brokers. You can then trade foreign currency directly between buyers and sellers with no intermediary. The commission is $2.50 on a $25,000 exchange. The rate is whatever is quoted on the Fx market at the time of the trade, and the spread between buying and selling is usually between $0.0001 and $0.0003.

You can open a USD dollar account at your bank or broker. Transfer money from your CDN dollar account to IB, convert it to US dollars and transfer it back to your USD account, all for a total cost of $2.50. You will never again have to pay the extortionate hidden fees that banks suck out of foreign currency transactions.


----------



## m3s (Apr 3, 2010)

Jaberwock said:


> You can open a USD dollar account at your bank or broker. Transfer money from your CDN dollar account to IB, convert it to US dollars and transfer it back to your USD account, all for a total cost of $2.50. You will never again have to pay the extortionate hidden fees that banks suck out of foreign currency transactions.


IB rules for sure

For that much hassle though, it's easier to run the gambit. The problem is the auto-exchanges on USD dividends at horrid rates!


----------



## humble_pie (Jun 7, 2009)

i don't think the issue in this thread is comparing broker FX rates for people who just plain want to exchange currencies.

how to exchange currencies with no FX fee - ie through gambit or arbitrage trading, or via forex trading in an IB account - has been exhaustively dealt with in countless cmf forum threads for more than 3 years now.

the issue now are trapped dividends that, because of broker policies & broker systems, are being charged FX fees - usually in a concealed manner - even while the investor either does not know what is going on, or else he cannot do anything about it.

what's being established very precisely in this thread, with its broker FX comparisons, is how surprisingly high those hidden FX fees are. They have risen a great deal in recent years. At td waterhouse, for example, the USD/CAD spread has jumped from 1.90 a few years ago to around 2.90 today.


----------



## HaroldCrump (Jun 10, 2009)

HaroldCrump said:


> The most recent USD dividend I received was Talisman Energy on the 28th of June.
> For that day, the XE.com rate was 1.0516 CAD per USD.
> However, my dividend was converted at the rate of 1.0173.
> Therefore a difference of 3.2%.
> ...


Agrium dividend came in yesterday (payable date of 7/18).
Dividend amount was $0.50 USD
BoC noon rate was 1.0396

I should have received $0.5198 per share.
I received $0.5256 per share.

Therefore, the conversion rate applied was 1.0512
This seems higher than the BoC rate.

XE.com rate for yesterday was 1.0427, slightly higher than the BOC rate.
What I received seems to be better than both.

Now I am puzzled.


----------



## humble_pie (Jun 7, 2009)

HaroldCrump said:


> Agrium dividend ... Now I am puzzled.




!!

indeed

here's what at least some canadian companies that pay dividends in USD do when they're issuing old-fashioned printed dividend cheques to each registered shareholder:

- they check to see if shareholder resides in canada or the US. Shareholder gets his div in currency according to where he resides. However, these companies do seem to have opt-out provisions; that is, shareholders in canada can request to have their dividend paid in original USD if they want.

- if they need to convert, these companies use Bank of Canada noon rate on the record date. This date is a bit different from what 2 brokers say they are using for FXed conversion of USD dividends. BMO & TDDI say they use the payable date, which is, of course, the date they actually receive the dividends in bulk amount, usually via the CDS system.

HC i'm wondering whether exchange differences between these 2 dates - record & payable - might be the reason for your higher-than-expected div since you were thinking of payable date only?

the above-mentioned method of BOC noon rate on record date seems to be what drove m3s' excellent FX conversion in potash divs paid into his rrsp recently. No investor anywhere could ever hope to have any rate more favourable.


----------



## HaroldCrump (Jun 10, 2009)

Record date was April 9th for this dividend.
Noon rate of 4/9 was actually even lower than yesterday's (1.0162).
If the record date is being used, I should have received even less.

My two examples above - Talisman Energy and Agrium - are entirely polar opposites.
In the first case, I got a rate that was 3.2% worse than the BoC rate.
The second case is quite a bit better than the BoC (and XE) rate.

The only thing I had done between these two events is called and complained about it and had them open a case for looking into it.
I haven't heard anything back, not a peep.
I have assumed that they will conveniently forget about it.
But could that be it?
Sounds hard to believe, but are they applying different rates for different clients?
Kind of like the squeaky wheel gets the grease.

Can anyone else with Agrium shares in a CAD A/C post their dividend conversion rate, please.


----------



## humble_pie (Jun 7, 2009)

i'm looking also for slight imperceptible frisson that the brokers are beginning to get the memo that some investors at least are fed up with hi FX rates, particularly hidden FX fees.

one has to look minutely & i can't write yet, but i believe i'm seeing just a hint of a shiver at 2 other brokers ...

all the brokers are shifting now to electronic no-paper-no-postal-costs format? good, then they'll be able to cut costs so radically that they can stop stiffing us on the FX.


----------



## HaroldCrump (Jun 10, 2009)

Talisman Energy dividend was paid into my CAD$ RRSP overnight.

Declared dividend amount - $0.0675 USD
BOC noon rate yesterday - $1.0285
BOC closing rate yesterday - $1.0303

Conversion rate applied for me - 1.0345

This seems marginally better than the closing rate.
I looked up the closing rate on the dividend record date (16th Aug) and it was a lot lower - $0.9672

Therefore, it seems there has been a dramatic shift sometime during the last 3 - 4 months.
My dividends prior to June 2013 have a 3.2% spread, whereas post June 2013 there is no spread whatsoever.
The dividend conversion rate is now even better than gambit !


----------



## HaroldCrump (Jun 10, 2009)

Agrium dividend came in on the 17th.

Declared dividend amount - $0.750 USD
BOC noon rate on 10/17 - $1.0285
Conversion rate applied for me - $1.0285
I received $0.7714 CAD per share

In other words, the conversion was exactly at the BOC noon rate on the dividend payable date (not record or declared date) right down to the pip.


----------



## james4beach (Nov 15, 2012)

This is the kind of thing they will get away with until enough people catch on that class action lawsuits become feasible.

Brokers are not inherently honest places. They will get away with whatever they can. Parasitism is the nature of brokerages and money managers... I'm aware of at least one operation among Big Five investment banks that routinely rips off pension funds with similar FX games to what's described here

I call it ripping off, but they don't. The viewpoint of banks/brokers is, hey if it's not illegal then I can do it (and they are proud to do it and take home those bonuses)


----------



## Sampson (Apr 3, 2009)

HaroldCrump said:


> In other words, the conversion was exactly at the BOC noon rate on the dividend payable date (not record or declared date) right down to the pip.


That's at Scotia correct?

Have they instituted some changes?


----------



## HaroldCrump (Jun 10, 2009)

Sampson said:


> That's at Scotia correct?


Yes, Scotia iTrade



> Have they instituted some changes?


I would say for sure they have, although nothing is official.
If you have followed this thread and my posts on the FX conversion rates applied to dividends, there has been a dramatic change around the June timeframe.

Dividends prior to June were FX'ed at a rate of 3% to 3.50% over BOC noon rate.
Since June, I have been received BOC noon rate, and once or twice a pip or two better.

I don't think this is a coincidence at all - it coincides with this issue being discussed at lot on CMF, and one particular member humble_pie making several behind the scenes lobbying efforts at another brokerage.
I am sure all the brokerages are tuned into this matter now.

This is in an RRSP account at iTrade.


----------



## humble_pie (Jun 7, 2009)

yea the revolution is under way!

scotia has seen the writing on the wall & is apparently delivering USD dividends with exchange rates calculated at the spot/bank of canada rate. There can be no better exchange rate for the investor.

in a nearby thread i've recently posted how TD is preparing a patch on a crash basis that will soon deliver USD dividends in USD to registered accounts.

folks ya'll did it! all those phone calls, emails to brokers asking for honest terms on USD dividends in registered accounts are getting through to em!


----------



## mrPPincer (Nov 21, 2011)

We're definitely seeing some progress, keep the pressure on 

To everyone who's been shining a spotlight on this (& CC's article I think really did help a lot) & everyone working quietly & tirelessly behind the scenes (cough*humble_pie cough*cough).. it seems to be working, keep up the good work!!


----------



## CanadianCapitalist (Mar 31, 2009)

humble_pie said:


> in a nearby thread i've recently posted how TD is preparing a patch on a crash basis that will soon deliver USD dividends in USD to registered accounts.


Is the TDDI patch for *all* USD dividends in registered accounts or just DRiPs? If it's for all USD dividends, it would remove a major gripe about TDDI.


----------



## humble_pie (Jun 7, 2009)

CanadianCapitalist said:


> Is the TDDI patch for *all* USD dividends in registered accounts or just DRiPs? If it's for all USD dividends, it would remove a major gripe about TDDI.



i addressed this point in the other thread ...


----------



## CanadianCapitalist (Mar 31, 2009)

From the other thread:



> what i have is a letter on paper - hard copy - that TD will auto-wash USD dividends in rrsp by 31 december/13. That's just over 2 months away.
> 
> the letter does not make clear whether the laundry add-on is being built for DRIP dividends only, or whether it will be deployed for all USD dividends in all registered accounts.


http://canadianmoneyforum.com/showthread.php/16430-US-Stock-Dripping

So, it's not clear if TDDI patch is all USD dividends in registered accounts, correct?


----------



## Sampson (Apr 3, 2009)

I bet it is not for all, otherwise they could have to wash into a USD MMF, or let you hold the USD directly in the account. Speculation.


----------



## humble_pie (Jun 7, 2009)

my post on 18 october/13 was clear as night & day. There's no reason to ask me if it was "correct."

CC you've omitted a key sentence. I said i would write to my sources on this issue over the weekend.

i did thus write, of course. A meeting is scheduled for later this week. A brief interview.

http://canadianmoneyforum.com/showthread.php/16430-US-Stock-Dripping?p=202631&viewfull=1#post202631


----------



## My Own Advisor (Sep 24, 2012)

Are you going to do a blogpost about this CC? That would be great.


----------



## HaroldCrump (Jun 10, 2009)

Agrium Inc. dividend came in this morning into my iTrade CAD$ RRSP A/C.
Squeaky clean washed with the BOC noon rate on the dividend record date, down to the last pip (1.0636 as on 12/31/2013).

I can now confirm the following two facts:
- Scotia iTrade is converting USD dividends paid by Canadian companies such as Talisman and Agrium held inside CAD$ registered account using BOC rates
- The rate being applied is the BOC noon rate as on the _*Dividend Record Date*_.

I won't post updates, but I will keep a eye on this for another quarter or two, in case something changes.


----------



## AltaRed (Jun 8, 2009)

As I may have mentioned in an earlier post, that is also my experience in my taxable iTrade account (but not my BMO IL account).


----------



## humble_pie (Jun 7, 2009)

AltaRed said:


> As I may have mentioned in an earlier post, that is also my experience in my taxable iTrade account (but not my BMO IL account).




yes, that was my understanding from what you & HC had posted over recent months.

would it be accurate to say that scotia is exchanging *all* USD dividends - including the 20 canadian payors of USD dividends such as Potash - in *all* accounts - including cash, margin & registered - at favourable spot rates?

no other broker is treating dividends from the 20-canadians-that-pay-USD-dividends so fairly. Other brokers - including bmo & roybank - are still charging FX fees upon those dividends when the shares are held in CAD cash & margin accounts, which is where the majority of canadian investors are still holding such shares.

please notice that at bmo - presumably at roybank as well - shares of the 20-canadians-that-pay-USD-dividends have to be manually placed on the US side of a new bmo rrsp account. The BMO representatives say they have been trained to handle this & they will help all incoming registered account clients with this issue. The issue arises because reg'd accounts coming in from monocurrency rrsp brokers do, in fact, deliver all shares including US shares to the canadian side only of a new bmo account (this is logical, if u think about it.)

best wishes to all who are on the move. It's the great spring 2014 pilgrimage. All are making their way towards a more profitable Canterbury. Chatting, singing, telling stories, exchanging tips & collecting benefits as they move along.


----------



## goose7201 (Nov 26, 2013)

humble_pie said:


> yes, that was my understanding from what you & HC had posted over recent months.
> 
> would it be accurate to say that scotia is exchanging *all* USD dividends - including the 20 canadian payors of USD dividends such as Potash - in *all* accounts - including cash, margin & registered - at favourable spot rates?
> 
> ...


This is a great thread and thanks to all the contributors as it has also prompted me to review my recent USD dividends at iTrade. As HaroldCrump experienced, I also received the recent AGU dividend at precisely the noon spot rate on the record date (and other divs in my taxable account). However, in my TFSA and RRSP accounts the spread seems to be all over the map (though not as bad as Fx spreads in the past). I set out a table below showing my calcs (sorry about the formatting - I can't seem to figure out how to insert a table/spreadsheet). 

Am I missing something here as it does not appear that iTrade is exchanging divs at spot rates consistently in TFSA/RRSP accounts in my case? To confuse matters more, the two divs where iTrade appears to charge a 1-2% spread occurred in my wife's TFSA whereas the two instances where it appears I received a more favourable exchange rate than spot occurred in my TFSA. Thoughts? Could it be possible that iTrade charges different spreads to different clients (yet I was charged the same spread on my KO dividend in my RRSP that my wife was charged on her MCD dividend in her TFSA. Both had the same record date)? I must be missing something here... and am very confused.


Ticker Record Date Div/Share Fx Rate Account Noon spot Variance	Spread


ECA 13-Dec-13 $0.0741 1.0592 Cash 1.0595 -0.0002	-0.02%

JNJ 26-Nov-13 $0.6976 1.0570 Cash 1.0547 0.0023	0.22%

AGU 31-Dec-13 $0.7977 1.0636 Cash 1.0636 0.0000	0.00%

BBL 6-Sep-13 $1.2042 1.0205 TFSA 1.039 -0.0185	-1.78%

MCD 2-Dec-13 $0.8513 1.0510 TFSA 1.0634 -0.0123	-1.16%

PFE 8-Nov-13 $0.2528 1.0535 TFSA 1.0487 0.0049 0.46%

WAG 18-Nov-13 $0.3323 1.0551 TFSA 1.0427 0.0125 1.20%

KO 2-Dec-13 $0.2942 1.0509 RRSP 1.0634 -0.0124 -1.17%


----------



## HaroldCrump (Jun 10, 2009)

Thanks for posting, goose.
Your findings thicken the plot, LOL.

Several things stand out.
One, the spreads seem to be a lot smaller than what I had observed and others have reported.
USD dividend FX spreads ranged between 1.50% (at the lowest) to as high as 3.50% (which I personally experienced in early 2013).
Yours seem to be miniscule in comparison, except for a couple of instances that are in the 1% range.

Secondly, w.r.t. Scotia iTrade, I found the dividend FX policy changed sometime around summer 2013. 
June 2013 is the best I could narrow it down to, because a large number of quarterly dividends come in during late June (incl. Talisman and Agrium).

I believe there was one or two instances (posted somewhere in this thread) where I got slightly better than BOC noon rates.
Better just by a few pips.
I can see that you have received that as well. 0.22% and 0.46% in a couple of cases.

As for the ones where there is a larger negative variance, is BBL an ADR (Australian mining giant BHP) ?
Can you please check the record dates - are they the same for the base shares as well as the ADR?

It seems that you are getting unfavorable rates for the US based companies, such as MCD, KO, and Walgreens.
Can you please check the noon rate on the dividend payment date?

I am thinking it might be possible that in the case of US companies, iTrade is using the payment date rate instead of the record date.

I would say we can safely ignore the -0.02% variable for ECA, which is a Canadian company.
It is literally a 3 pip difference - let's cut them a break for this, shall we 

goose, the other thing that stands out is that most of your US stocks are in the TFSA.
May I ask why?
You know, right, that in a TFSA there is a 15% US withholding tax, non-recoverable?
Can you not hold these in the RRSP?


----------



## humble_pie (Jun 7, 2009)

something i'm becoming more convinced of as we walk, trudge, stumble, chatter, pray & sing on our pilgrimage towards that perfect RRSP in the shrine at Canterbury ...

i think it's just a lot simpler to just go get an RRSP at one of the 3 brokers that offer pure dual currency registered plans.

i mean they can accept & hold USD dividends as 100% US dollars. The greenbacks will show up on statements. No FX fees. Clear as a bell. 

one of the things that would worry me about scotia or cibc is that they're not saying anything upfront about how they do things. For the good reasons that HC already listed. They haven't been behaving themselves in the past & they don't want to guide attention to a class action suit.

so - because these brokers aren't explaining or pledging anything - they could change their foreign exchange conversion practices tomorrow. Who wants to set themselves up for years & years of having to spot-check dividends now & then against the bank of canada noon rate, just to make sure the broker hasn't slipped back into its bad old ways?

nae nae it's a lot easier imho to just go for the US greenbacks. Once again, those brokers are (in the order in which they launched their dual-currency rrsps): questrade, royal bank, bmo investorline.


----------



## richard (Jun 20, 2013)

humble_pie said:


> so - because these brokers aren't explaining or pledging anything - they could change their foreign exchange conversion practices tomorrow. Who wants to set themselves up for years & years of having to spot-check dividends now & then against the bank of canada noon rate, just to make sure the broker hasn't slipped back into its bad old ways?
> 
> nae nae it's a lot easier imho to just go for the US greenbacks. Once again, those brokers are (in the order in which they launched their dual-currency rrsps): questrade, royal bank, bmo investorline.


That is a danger. Dividends are a small issue unless you're finding some stocks that yield a nice 20% though  If someone unknowingly buys a US stock and pays the full exchange fee, how long will it take for the added costs on their dividends to add up to the loss they had on the first day? Just being able to buy or sell without having to take the long way around would be nice. And if you aren't doing NG, it always pays to get a quote and then see if it's actually good before committing. Looking up a number can't be harder than making several trades at once.


----------



## gibor365 (Apr 1, 2011)

Even though I was told by rep that FX rate applied in Record date, I have impression that it's not always and depends on equity stock or ETF.... I check one time dividend for COP , and if I take in consideration records date, my FX rate would be much much better thatn BoC noon rates, and it was very close if I take in calcs payment date.


----------



## goose7201 (Nov 26, 2013)

HaroldCrump said:


> Thanks for posting, goose.
> Your findings thicken the plot, LOL.
> 
> Several things stand out.
> ...



Thank you for the replies. I apologize that I haven't been able to reply sooner. 

W.r.t BBL you are correct in that BBL is the ADR for the UK listed shares of BHP Billiton (whereas BHP is the ADR for the Australian listed shares). They do share the same record and pay dates with the underlying shares.

Your idea that iTrade may be utilizing payment date for certain conversions is interesting. Set out below is a table of the calculations based on the noon spot on the payment date. Once again, apologies for the formatting.

Ticker	Date Paid Div/Share Fx Rate Account Noon spot	Variance	Spread

ECA	31-Dec-13 0.0742 1.0593 Taxable 1.0636	-0.0043	-0.41%

JNJ	10-Dec-13 0.6976 1.0570 Taxable 1.0623	-0.0053	-0.50%

AGU	16-Jan-14 0.7977 1.0636 Taxable 1.0926	-0.0290	-2.65%

BBL	25-Sep-13 1.2042 1.0205 TFSA 1.0295	-0.0090	-0.87%

MCD	16-Dec-13 0.8514 1.0511 TFSA 1.0577	-0.0066	-0.63%

PFE	3-Dec-13 0.2529 1.0536 TFSA 1.0662	-0.0126	-1.18%

WAG	13-Dec-13 0.3324 1.0552 TFSA 1.0595	-0.0043	-0.41%

KO	16-Dec-13 0.2943 1.0510 RRSP 1.0577	-0.0067	-0.64%

While for many of the US based companies the spread is smaller on the payment date, the spread on PFE is certainly larger than on the others. So it seems to me that on the CDN listed companies paying dividends in USD, iTrade is in fact converting at or near spot on the record date. For foreign listed shares, the picture is certainly murkier. However, the spreads appear to have shrunk from days past. I will continue to monitor my USD dividends to see if it helps clear up the picture and will report back once the next set of USD dividends rolls in to see how it compares to Harold's, AltaRed's and others' findings. I certainly hope that iTrade's fx policies are improving as I don't really want to be doing conversion calculations forever as humble has alluded to.

Yes, I am aware the withholding tax is not recoverable on securities held inside a TFSA. For various reasons (available room, available cash, etc.) , buying those shares in my RRSP wasn't a viable option at the time those shares were purchased. Thus, where I could I went with what I thought was the lesser of two evils of "paying" a 15% withholding tax in the TFSA vs. paying my full marginal tax rate on the dividends in the cash account. I am in the process of slowly correcting this with the goal of eventually having most (if not all) inside my RRSP.


----------

