# can I buy OTC stock in RRSP



## canadian_investor (Jul 4, 2011)

there are some very stable blue chip foreign stocks that trade on the OTC. is it allowed to buy such stocks inside RRSP?
Nestle is one such stock. but the stock I am considering to buy is Deutsche Telekom (German Telecom).
its ticker symbol is DTEGY and it trades on the OTC.
is this allowed?


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## Eclectic12 (Oct 20, 2010)

Morning says no ...



> ... securities that trade on over-the-counter markets, even if those markets are overseen by a designated exchange, do not qualify for RRSPs.


http://cawidgets.morningstar.ca/ArticleTemplate/ArticleGL.aspx?id=370808


But for TFSAs, this FP article says that if the OTC stock trades on an accepted exchange as well - then it will be acceptable.
I would expect the interpretation to be the same for RRSPs but don't know.

http://business.financialpost.com/2...can-invest-that-in-your-tfsa/?__lsa=09f9-6408


Other links:
http://www.ggfl.ca/blog/ggfl-newsletter-summer-2012/is-that-hot-stock-tip-eligible-for-your-rrsp
http://www.taxtips.ca/rrsp/qualifiedinvestments.htm


Cheers


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## Mockingbird (Apr 29, 2009)

When in doubt, stick to the "Designated Stock Exchanges". Both Nestle and Deutsche Telekom are listed on the non-OTC as well.


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## gt_23 (Jan 18, 2014)

canadian_investor said:


> there are some very stable blue chip foreign stocks that trade on the OTC. is it allowed to buy such stocks inside RRSP?
> Nestle is one such stock. but the stock I am considering to buy is Deutsche Telekom (German Telecom).
> its ticker symbol is DTEGY and it trades on the OTC.
> is this allowed?


Depends on your broker. If you're cheap and use one of the crappy discounts, then the answer is probably no.


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## canadian_investor (Jul 4, 2011)

Mockingbird said:


> When in doubt, stick to the "Designated Stock Exchanges". Both Nestle and Deutsche Telekom are listed on the non-OTC as well.


what non OTC north american exchange are they listed on?

they are listed in their respective countries but most of us retail investors are limited to buying stocks on north american exchanges only.
i know TDW and HSBC allow premier clients to buy stocks on exchnages worldwide but i am not among them.

i see Deutsche Telekom listed only on OTCMKTS


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## humble_pie (Jun 7, 2009)

i think the original question is very valuable & well worth pursuing.

alas i don't have the answer. CI, could you perhaps ask your broker & see what they say, then post back here?

if anyone else has brokers' views on what their RRSP admin departments are saying about the issue, would greatly appreciate.

certainly the foreign section of the pink sheets (OTC stock nearly always ending in "F" or "Y") contains some noble & majestic names, such as Nestle & deutsch telekom. Some of these shares could or would be good candidates for a conservative registered account portfolio.

btw i believe that every TD client is able to buy & sell overseas stocks on their global trading platform? the reason we don't do this is that the ADRs work just about as well, the ADR commish are very cheap (standard 9.99 at the big green) while the overseas commish are running north of $60 & $75 ...

the interesting justaposition is when an ADR trades only OTC in the US of A, now we need to find out what the BRKRS think about those ADRs in RRSPs ...


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## Eclectic12 (Oct 20, 2010)

canadian_investor said:


> what non OTC north american exchange are they listed on?


You are missing the point from the articles that the stock being listed on an acceptable stock exchange seems to make the same stock on the NA OTC market eligible.

The DT web site says:


> T-Shares are traded at all seven stock exchanges in Germany including the Frankfurt Stock Exchange as well as on OTCQX.


The Finance dept link accepts either the Frankfurt or Stuttgart exchange.
http://www.fin.gc.ca/act/fim-imf/dse-bvd-eng.asp

As long as the same reasoning of "an acceptable exchange lists the same stock so that stock is okay via OTC" holds, it should be okay.

I would do proper due diligence as well as have proof of it so that if any question comes up, any penalties can be argued against.


Cheers

*PS*

It's interesting you list DT which is listed on the Stuttgart exchange because the TFSA article says the Fannie Mae OTC stock was bought *because* it was still listed on the Stuttgart exchange.

If one does not want the headache of getting the financial institution's approval as well as keeping documentation, then another possibility is to see if there is an ADR traded on an accepted US exchange that can be used instead.

http://en.wikipedia.org/wiki/American_depositary_receipt
http://www.canadiancapitalist.com/tax-implications-of-foreign-dividend-investing/


It seems that until June 2010 - the DT ADR was listed on the NYSE, which is on the Finance dept acceptable list.
http://www.telekom.com/investor-relations/share/adr-program/62554


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## avrex (Nov 14, 2010)

Eclectic12 said:


> But for TFSAs, this FP article says that if the OTC stock trades on an accepted exchange as well - then it will be acceptable. I would expect the interpretation to be the same for RRSPs but don't know.
> http://business.financialpost.com/2...can-invest-that-in-your-tfsa/?__lsa=09f9-6408


hehe, I unwittingly caused a stir when I commented on validity of the investment in the original National Post article.

When I commented on whether the OTCs in the TFSA was valid or not, I think the National Post got a little worried.
They ended up contacting the CRA and updating their online article a couple of times in the days after it was published.

Here's my post on it,
He’s got the largest TFSA …but did the investment qualify?

A couple of points from this investigation,
*1. * As long the OTC stock also trades on a CRA Prescribed Stock Exchange, it's good.
*2.* Although Point 1 appears to be valid, the CRA always seems to have a disclaimer statement in the form of ....The CRA "does not make determinations as to whether a particular investment is a qualified investment except in the context of an advance income tax ruling or audit.”

In the OPs example.....
Deutsche Telekom trades as DTE:GR on the symbol Frankfurt Stock Exchange.
Since this stock trades on a CRA Prescribed Exchange, he can therefore purchase the OTC version of this stock on another exchange. He is good.

Here's an exception: Canadian stocks that where once on the TSX but get delisted and become Canadian OTC stocks, are still valid for RRSP/TFSA inclusion. This rule does not apply to foreign stocks.


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## humble_pie (Jun 7, 2009)

avrex i was hoping you'd show up here. The key thing imho is whether the TFSA winner's fannie mae shares traded Stuttgart in the principal organized exchange (recognized by the CRA) or whether they traded in the stuttgart auxiliary gray market (not recognized by CRA.)

here is CRA media relations advisor Mylene Croteau explaining (at the time of this article) that the CRA had not yet made any determination about which stuttgart market might be hosting the fannie maes.

http://business.financialpost.com/2...housing-market-for-your-tfsa/?__lsa=4a5b-e0a6

mme croteau writes:

_“Like many stock exchanges in the European Union (EU) the Stuttgart Stock Exchange operates two market segments, an official EU-regulated market and an unofficial market that is regulated by the exchange itself. Only the official market is considered a designated stock exchange for Canadian tax purposes. The unofficial market does not qualify. It is not recognized as an official market under European law, nor is it subject to stringent transparency requirements and investor protection regulations. It follows then that a listing on the unofficial market is not a basis to obtain qualified investment status for TFSAs. Unless the security qualifies under another provision, it cannot be held in a TFSA without triggering adverse tax consequences. These comments apply equally to investments for RRSPs and other registered plans that are subject to the qualified investment rules under the Income Tax Act.”_


to the best of my knowledge, most global markets have grey/pink markets attached & operating as satellites. Canada has one, which the CRA doesn't recognize. The US certainly has, not just one, but several. London has its main exchange, plus london also has its rowdy, unregulated junior AIM.

i don't know how the fannie mae/stuttgart story turned out. But i don't think it *proves* beyond a shadow of a doubt that a Nestle or a DT share traded stateside as an OTC ADR is necessarily - legally - the exact same vehicle as the common shares traded in principal german or european organized exchanges. I would be concerned that an ADR might, in the end, be viewed by the venerable canadian minister of finance as an independent bundled security traded OTC in the US but with no senior trading anywhere else on the planet. Oops.

i for one think the best authority should be the broker's own RRSP department. It's my belief that the TD's is diligent; therefore i assume that all big bank brokers take their RRSP duties as trustees equally seriously.

i don't think this is a case where the investor should wing things on his own, with his own attempts at "proof" if the CRA turns out to disagree. If it were myself, i'd be 100% prepared to bail the project if i got a whiff of ambiguity or we-don't-know-so-do-this-at-your-own-risk from the broker.


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## avrex (Nov 14, 2010)

you're right humble. I had forgotten.
I had to re-read my post to realize that the CRA representative had retracted her statement.

On June 19, 2013, her statement in the article stated,
_“since Fannie Mae is also listed on designated exchange, Mr. Hirani is allowed to hold it in his TFSA.”_

However, the next day, on June 20, 2013, the line above was removed from the article and replaced with
_“Given the wide variety of investments that exist, the CRA does not make determinations as to whether a particular investment is a qualified investment except in the context of an advance income tax ruling or audit.”
“Only the official market (i.e. regulated Stuttgart Stock Exchange) is considered a *designated stock exchange* for Canadian tax purposes. The unofficial market (i.e. the unregulated portion of the regulated Stuttgart Stock Exchange) does not qualify.”_

Jamie Golombek's article was published on the morning of June 22, 2013, where he stated,
_"Fannie Mae, which used to be traded on both the New York Stock Exchange and the Chicago Stock Exchange, was delisted in June 2010 and began trading on the OTC Bulletin Board, which is not a designated exchange; however, because it also listed on the Stuttgart Stock Exchange in Germany, it appears its shares *do qualify* for investment by TFSAs, regardless of which exchange the shares are purchased through."_

His statement is in agreement with the CRAs first statement in the June 19th version of the first article.
However, we must remember that this CRA statement was retracted the next day. 
Perhaps Mr. Gobombek wasn't aware of the retraction, as he may have wrote his article as the updates/retractions were still being made in the first article.

In any case, if you want to be safe, *do no hold OTC stocks in your TFSA/RRSP.*


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## humble_pie (Jun 7, 2009)

i suspect - don't know for 100% sure - but i suspect from the letter "Y" suffix that the creature belongs to the OTC foreign section.

there are a lot of very distinguished foreign stocks in there, as we've been discussing. I'm not sure why they don't move to bigger boards except i imagine it all has to do with their principal US shareholders. 

bombardier is one of the OTC foreign stocks. BBD dot B doesn't trade on an organized US exchange, only in pink sheets foreign section.

i remember the nice IR person at BBD telling me that from time to time the company would ask their US shareholders if they were still happy with no US senior exchange listing. Apparently these nameless bigtime stateside shareholders would always reply Yes-we-are-quite-happy-thank-you.


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## Eclectic12 (Oct 20, 2010)

humble_pie said:


> ... there are a lot of very distinguished foreign stocks in there, as we've been discussing. I'm not sure why they don't move to bigger boards except i imagine it all has to do with their principal US shareholders.
> 
> bombardier is one of the OTC foreign stocks. BBD dot B doesn't trade on an organized US exchange, only in pink sheets foreign section.


No idea for BBD ... but I suspect price and/or possibly volume for the DT ADR as DT's web site says it was originally traded on the NYSE until June 2010. Since the NYSE is on the Finance dept list, as I understand it - it was fine. 

The question today now that it's traded on the OTC market instead of an accepted exchange, is whether it's considered by Finance/CRA as being the same thing as the German exchange listed one plus whether the same "if it's good there, it's the equivalent when bought on the OTC market" reasoning applies.


If was bothering with it - as you say, I'd start with the broker. Even if CRA is happy with it, if the broker is conservative, it might be moot unless one is willing to continue on to get CRA's approval plus find a less conservative broker.


Cheers


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## humble_pie (Jun 7, 2009)

Eclectic12 said:


> The question today now that it's traded on the OTC market instead of an accepted exchange, is whether it's considered by Finance/CRA as being the same thing as the German exchange listed one plus whether the same "if it's good there, it's the equivalent when bought on the OTC market" reasoning applies.




eclectic with all due respect perhaps you are not quite getting this? 

there are *two* (2) Stuttgart exchanges. One is the senior recognized Stuttgart exchange. The CRA in its latest quoted statement from mme Croteau says this exchange is acceptable to the CRA.

the other Stuttgart exchange is the same nebulous, unregulated, pink, grey, over-the-counter, junior exchange that exists alongside the senior exchange exactly as the grey OTC market exists in canada alongside the senior TSX. Exactly also as the grey unregulated british AIM market exists in england alongside the senior London exchange, etc.

mme Croteau writes that the unregulated junior Stuttgart exchange is not recognized by the CRA. At the time she wrote her statement - which was quoted by the NatPost - the fannie maes were trading in this unregulated junior Stuttgart exchange.

i would imagine that, worldwide, these grey, unregulated, nebulous, shadowy exchanges exist alongside all senior organized regulated exchanges, without exception. All that is necessary is a dealer or pair of dealers who will trade some shares. The dealers don't even have to be market makers, ie they have no responsibility to maintain an orderly market. In fact the US pink sheets are notorious for trading shares that don't even exist. In fact organized crime is heavily into these non-existent pink sheet shares ... but all that is another story ...

for me, it boils down to my being 100% sympathetic to ministry of finance efforts via the CRA to prevent canadians from investing their retirement monies in shares that may be shadowy, spooky, non-existent, never report any financial results, are impossible to analyze or unsavoury in other ways. 

if this means ruling out wholesome companies like Nestle & deutsche telekom because their US ADRs happen to only trade OTC, then so be it. C'est la vie. It's still a far better arrangement than allowing canadians to buy OTC stocks - the majority of which are tainted penny stocks - in their retirement accounts.

because we have never heard any follow-up to this TFSA-fannie-mae-stuttgart story, i have to assume that the final CRA decision has not been rendered. Either that, or the TFSA investor may be considering a tax court appeal. 

please, we don't want cmf members to go through ordeals like this! just keep the registered accounts squeaky clean, as avrex suggests!


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## Eclectic12 (Oct 20, 2010)

humble_pie said:


> eclectic with all due respect perhaps you are not quite getting this?
> 
> there are *two* (2) Stuttgart exchanges. One is the senior recognized Stuttgart exchange...
> the other Stuttgart exchange is the same nebulous, unregulated, pink, grey, over-the-counter, junior exchange ...


With all due respect ... I'm clear on two exchanges existing where one is accepted and the other is rejected by the Finance dept/CRA.


As for Fannie Mae reportedly being traded solely on the rejected exchange ... that's not good news for the TFSA investor but as FM was a foreign stock, the possibility it was not traded on the accepted exchange is not surprising. Based on the article, the TFSA investor seemed to think that his broker's approval of the proposed transaction would help with any CRA disputes ... which we'll have to keep an eye out for future reports to see how valid that idea is.


The OP, on the other hand was mentioning blue chip OTC stocks in general and Deutsche Telekom in particular. 

This looks to me to be a domestic German stock which is listed on seven German exchanges so I thought it unlikely that it would trade solely on the Frankfurt & Stuttgart junior exchanges (i.e. the rejected ones) . This would be like Bell Canada trading solely on the Canadian OTC and skipping a TSX listing. I suppose it is possible and should be checked.


With this assumption and a wording of:


> ... I would be concerned that an ADR might, in the end, be viewed by the venerable canadian minister of finance as an independent bundled security traded OTC in the US but with no senior trading anywhere else on the planet...


... it appeared to me that the concern being raised was that the shares listed on the accepted exchange might not be considered the same as the ADR on the OTC exchange. It is more complete to worry about both ... but I suspect the more likely risk is the "they are not the same" risk.




humble_pie said:


> ... for me, it boils down to my being 100% sympathetic to ministry of finance efforts via the CRA to prevent canadians from investing their retirement monies in shares that may be shadowy, spooky, non-existent, never report any financial results, are impossible to analyze or unsavoury in other ways... It's still a far better arrangement than allowing canadians to buy OTC stocks - the majority of which are tainted penny stocks - in their retirement accounts.


If OTC stocks are the problem that is painted ... then why allow any? 
And why make an exception for Canadian stocks?

Remembering the games played on the accepted exchanges by Bre-X, Corel & Nortel to name a few, I do have to wonder if the protection is all that good. As I recall, there were a few slaps on the wrist for those involved.




humble_pie said:


> ... please, we don't want cmf members to go through ordeals like this!
> just keep the registered accounts squeaky clean, as avrex suggests!


So what you are saying is that despite the OP talking about a blue chip OTC stock and asking what's possible in a RRSP, the blanket answer should be "it's too risky, stay away".

Where does one draw the line? 
Are options on Bell or TD stock "too risky" in an RRSP and should be banned?


Cheers

*PS*

Personally, I don't have the time to bother with OTC stocks in a registered account when likely there are ETFs or other means of holding a basket of foreign stocks.

However - for those willing to be careful in the selection and take the steps to provide protection should CRA or whomever dispute what was done, it appears that an OTC stock bought on a North American OTC market *may* be fine.

With the penalty being steep ... it is not something IMO for any but an advanced investor who has the time to take appropriate precautions both on the OTC stock selection front & the getting approvals/confirming what's acceptable front.


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## gardner (Feb 13, 2014)

humble_pie said:


> ministry of finance efforts via the CRA to prevent canadians from investing their retirement monies in shares that may be shadowy, spooky, non-existent, never report any financial results, are impossible to analyze or unsavoury in other ways.


The only thing they care about is if it is adequately regulated to ensure that you can't get control of your money without paying taxes on it.


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## PuckiTwo (Oct 26, 2011)

*Deutsche Telekom an OTC or listed on Regulated Exchange*

﻿German Bourse (Deutsche Boerse) and home of Deutsche Telekom shares has cleaned up quite a bit their Market structure since 2005. In 2012 Germany adopted the following changes and measurements:

1. There is now a *EU-regulated market (called Regulated market)* and
2. An Exchange-regulated market (Regulated unofficial market - called *Open Market*)

The EU-regulated market is divided in
1. *General Standard for shares* (segment with minimum legal requirements of the EU-regulated market, appropriate for companies which target national investors and opt for a cost-effective listing. German issuers are automatically included in CDAX l]

2. and *Prime Standard for shares* for companies wishing to position themselves to international investors. Prime Standard companies must comply with international transparency standards. Admission to Prime Standard is a prerequisite for inclusion in the selection indices DAX, MDAX, TecDAX and Sdax.

Then there is the *Exchange-regulated market (formerly Freiverkehr = free traffic = open market*). 
This is what Humble, Avrex and Electic12 referred to as “grey, unregulated market”. It wasn’t so much totally unregulated but it was only regulated by German bourse/government with much much lower standards. 

This grey market is* now called “Entry Standard”* and regulations are much tightened but still do not match the “General Standard or Prime Standard for shares”.
- *Entry Standard is bourse-regulated opposed to EU-regulated* and open to all companies wishing to include their shares in trading while meeting few formal requirements, particularly attractive for young and established SMEs.]
Source: Deutsche Boerse AG

There are a few questions:
1. What I haven’t figured out yet how you identify an “Entry Standard stock” if you trade for example in Stuttgart which allows both, the EU- and the bourse-regulated market. In addition to Dax, Xetra, etc. Germany has a number of small regional bourses (Berlin, Duesseldorf, Munich, Stuttgart, etc.) and apparently "Entry Standard" applications from smallish companies are encouraged. 
The *Entry Standard in Munich *I think is listed under *M:access* (I am still investigating). 
You would think that like in North America it says NSRGY OTC, that there is a code in their ISIN number to identify the "Entry Standard".

2. Can a blue chip like Deutsche Telekom be listed in the Prime Standard but also in the Entry Standard? If that were the case one as a Canadian investor would have to buy the stock in the Prime Standard in order to satisfy CRAs requirement

﻿3. The other question to CRA would be: do they accept stocks listed in both, the General Standard and the Prime Standard or only in the Prime Standard.

To the OP’s original question: Deutsche Telekom is listed on the DAX and according to the links above that would mean that it is accepted by CRA.


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## PuckiTwo (Oct 26, 2011)

Just realized that the links in my post #16 didn't work. Anybody interested, here they are:
http://xetra.com/xetra/dispatch/de/...0_transparency_standards/300_general_standard
http://xetra.com/xetra/dispatch/en/...200_transparency_standards/100_prime_standard
http://xetra.com/xetra/dispatch/en/...200_transparency_standards/400_entry_standard


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## PuckiTwo (Oct 26, 2011)

Reading the upthread discussion on the investor who bought Fannie Mae as a penny stock on the Stuttgart exchange I investigated because I want to find out how the German Exchanges work. I talked to a representative at the Stuttgart Exchange with the following results:

1. There is only 1 (one) exchange in Stuttgart, not two. However, within the Exchange there are 10 subsegments which have different purposes, for example Euwax (securitised derivatives), 4x (international equities),BondX, etc.

Not all securities are in a “Regulated Market”, e.g. in *4x *the segmentation is mixed. The rep said that most of their North American equities fall into the ‘unregulated market”! https://www.boerse-stuttgart.de/en/stock-exchange/segments-and-initiatives/.

The section “Master Data” shows the stock’s “transparence-level (such as Entry, General or Prime Standard) and its Market Segment. (Regulated or non-regulated/Open Market)”

For Fannie Mae the line “Market Segment” is empty - the bourse rep said that it meant that the stock is an “open-market stock”. According to the upthread discussion this could mean that the TFSA investor did buy a stock in an unregulated market (which CRA doesn’t seem to approve of)

Something else that has to be watched when checking out equities in the continental/German market: Regional Exchanges such as Stuttgart, may offer North American and other foreign equities but according to the Boerse-rep they are largely non-regulated.

Re *Canadian_investor’s *question re whether Deutsche Telekom is suitable for his TFSA. As far as I can determine it is listed on the German exchange = Frankfurter Boerse, its Transparenzlevel is “Prime Standard” and its Market Segment is quoted as “Regulated Market (Regulierter Markt). Should that satisfy CRA?

To find out what foreign securities are regulated and which are not is not rocket science, the websites have an English version. One has to dig a little bit deeper and do DD as you should do with all securities you investigate about. This is particularly important if you do any cross-border trading as IB offers.


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## avrex (Nov 14, 2010)

Great research work that you've presented. Thanks @PuckiTwo.


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## Eclectic12 (Oct 20, 2010)

PuckiTwo said:


> ... 1. There is only 1 (one) exchange in Stuttgart, not two. However, within the Exchange there are 10 subsegments which have different purposes, for example Euwax (securitised derivatives), 4x (international equities),BondX, etc.
> 
> Not all securities are in a “Regulated Market”, e.g. in *4x *the segmentation is mixed.


Wow ... not what I expected ... great work digging this out for those who might use it.




PuckiTwo said:


> ... The rep said that most of their North American equities fall into the ‘unregulated market”! ...
> 
> Re *Canadian_investor’s *question re whether Deutsche Telekom is suitable for his TFSA.
> 
> ...


All good info.

If the "regulated market" is accepted by CRA ... there is an outstanding wrinkle. AFAICT, the OP was interested in the North American OTC market as access to the foreign market (regulated or otherwise) was not available.

It would seem the from the OP's perspective - CRA wanting the stock to be listed on an accepted exchange has been taken care of. 
The remaining question that seems to need to be confirmed is whether the North American OTC ADR is considered the same thing as buying on the accepted exchange. Now that it's no longer traded on the NYSE (an accepted exchange).


... unless of course, the OP has checked with his broker & discovered that access to accepted international stock exchanges is available ... which would make a lot of the speculation moot. :biggrin:


Cheers


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## humble_pie (Jun 7, 2009)

Eclectic12 said:


> ... The remaining question that seems to need to be confirmed is whether the North American OTC ADR is considered the same thing as buying on the accepted exchange. Now that it's no longer traded on the NYSE (an accepted exchange)


yes, exactly.

what matters is not how Stuttgart exchange is organized but how, exactly, the CRA would or could rule.

there are hundreds of thousands of clean, wholesome, black & white, fully eligible RRSP securities that an investor can buy. Surely no one would choose to risk CRA confrontation over some obscure US OTC-traded ADR?

in the end, if push ever came to shove, i doubt the broker would bear responsibility. Especially not a discount broker. Even though they are acting as trustees for registered accounts.

it boils down to Why Risk the Bother? there are plenty of 100% acceptable foreign telecoms that trade as US ADRs on new york's acceptable Arca exchange. There are even US telco ETFs, i used to own one in RRSP.


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## Eclectic12 (Oct 20, 2010)

humble_pie said:


> yes, exactly.
> 
> what matters is not how Stuttgart exchange is organized but how, exactly, the CRA would or could rule.


 ... with the cavaet that the focus is an OTC stock.

If it's someone with access to the regulated & accepted German exchange, then all the good info dug up by PuckiTwo should be easily confirmed with CRA.




humble_pie said:


> ... there are hundreds of thousands of clean, wholesome, black & white, fully eligible RRSP securities that an investor can buy. Surely no one would choose to risk CRA confrontation over some obscure US OTC-traded ADR? ... it boils down to Why Risk the Bother?


A key question for the OP to answer for themselves ... as I posted up thread, Nestle & Deutsche Telekom are big - so there should be possibilities like Vanguard's VXUS ETF which hold one or both and are traded on acceptable exchanges. It's not as focused as holding but it does provide another way.




humble_pie said:


> ... in the end, if push ever came to shove, i doubt the broker would bear responsibility. Especially not a discount broker. Even though they are acting as trustees for registered accounts.


From the way the TFSA investor was quoted in the article and the reports that FM was only traded on the unregulated part of the exchange - it may only be a matter of time before a report surfaces to speak to this point.




humble_pie said:


> ... there are plenty of 100% acceptable foreign telecoms that trade as US ADRs on new york's acceptable Arca exchange. There are even US telco ETFs, i used to own one in RRSP.


I'll have to check these out.


Cheers


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## humble_pie (Jun 7, 2009)

Eclectic12 said:


> If it's someone with access to the regulated & accepted German exchange, then all the good info dug up by PuckiTwo should be easily confirmed with CRA.



respectfully, i disagree with you here. It is *not* easy to confirm complex points with the CRA. It is close to impossible, even for securities lawyers.

what a CRA representative might say on the phone is not binding in the least & the CRA makes that crystal clear.

the best source on deutsche telekom could be the body of private rulings already compiled by the CRA, although i do not believe there would yet be any private rulings on admissiblity of obscure US OTC traded ADRs that are bundles of foreign stocks ...

eclectic sometimes i wonder why you go on & on ... please don't encourage people to start arguing with the CRA for no reason.

this is a case where every sensible party would have departed long ago. There are hundreds of thousands of fine, attractive, RRSP eligible securities for investors to choose from. There's nothing about deutsche telekom or even Nestle to especially recommend them for RRSPs. Their dividend NR withholding taxes will be vicious as has been extremely well documented in another recent thread.

life's too short for marginal stuff like this imho.


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## PuckiTwo (Oct 26, 2011)

*Avrex and Eclectic12:* Thanks a lot for yr acknowledgment which I highly appreciate.

*Eclectic12: *
1. I agree with you - the emphasis is on *“if *an as in NA listed OTC stock is listed on the regulated market on a foreign stock exchange” is it accepted by CRA for a TFSA account?”.... Anybody who wanted go that route would have to check it out and I hope to have this made clear in my posts.

2. I also agree that if investors do not want to go this more “cumbersome” route they may choose other means to obtain a similar path (yr suggestion was VXUS ETF). 

*HP*: I also agree wholeheartedly with your post # 23
How the Stuttgart exchange works is definitely not of major importance - at least not to most and that part of my post referred only to the Fannie Mae story.
The complexity of CRA-rulings is not for the faint of heart. You are right, their information given on the phone is not binding (I have two experiences requesting written rulings with CRA - both very civil and professional, but it takes time).
b) I also don’t doubt that there are a good number of RRSP eligible securities (thread was talking about TFSA for which the rules and regulations are not the same, anyhow that point is moot and wasn’t the message of my posts)
c) most CMFers probably don’t have any interest in buying on foreign exchanges
d) I certainly would never question your investing expertise

Otherwise:
My strong interest in Europe and the two topics of the thread (Deutsche Telekom OTC and Fannie Mae penny stock thru Stuttgart Exchange) enticed me to investigate. 
I thought the info on foreign, non-NA exchanges would be interesting to at least some CMfers. Other threads mentioned London, even Hongkong - possibly for the lack of withholding tax). And several brokerages (at least IB and TDW) offer cross-border/buy-and sell on foreign exchanges). One would assume that investors using those services would be interested how those other exchanges work. There seem to be a number of non-NA nationalities on this forum and members have posted that they own NSRGY, GSX, Novartis, Swiss currencies and others. 

I definitely don’t encourage or discourage anybody from reading my posts, buying foreign securities (no matter in registered or unregistered accounts) or dealing with foreign exchanges. I also would not encourage or discourage anybody from dealing with CRA directly - that is everybody’s own decision. For myself, I wouldn’t leave anything unclear if I cannot get a reliable answer somewhere else. There are situations in life where even your best expert be it lawyer or accountant may not have the answer you need (CMFers excluded). Then one will need to go to the source.


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## Eclectic12 (Oct 20, 2010)

humble_pie said:


> respectfully, i disagree with you here. It is *not* easy to confirm complex points with the CRA. It is close to impossible, even for securities lawyers.


I've never tried it ... so I'll take your word for it.




humble_pie said:


> the best source on deutsche telekom could be the body of private rulings already compiled by the CRA, although i do not believe there would yet be any private rulings on admissiblity of obscure US OTC traded ADRs that are bundles of foreign stocks ...


I hadn't though of checking such a source.




humble_pie said:


> eclectic sometimes i wonder why you go on & on ...


Some are because the posted response seemed to be circling back to "buy it on the German accepted exchange" - which so far, the OP does not think is an available option.

Some are due to learning new things such as the vicious dividend NR withholding taxes, the availability of thousands of fine, attractive, RRSP eligible securities for investors to choose from on exchanges such as New York's acceptable Arca exchange.




humble_pie said:


> ... please don't encourage people to start arguing with the CRA for no reason.


I guess it depends on one's POV ... I'd rather suggest that someone who is already asking about OTC stocks call the CRA versus read what's here & dive in.
I'm not sure where the arguing starts.


Cheers


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## Eclectic12 (Oct 20, 2010)

PuckiTwo said:


> *Avrex and Eclectic12:* Thanks a lot for yr acknowledgment which I highly appreciate.


I always appreciate learning new things from other's sharing.


*Eclectic12: *
1. I agree with you - the emphasis is on *“if *an as in NA listed OTC stock is listed on the regulated market on a foreign stock exchange” is it accepted by CRA for a TFSA account?”.... Anybody who wanted go that route would have to check it out and I hope to have this made clear in my posts.



PuckiTwo said:


> ... 2. I also agree that if investors do not want to go this more “cumbersome” route they may choose other means to obtain a similar path (yr suggestion was VXUS ETF).


There seem to be lots of easier ways to achieve the same thing ... without the added complications of what CRA may or may not decide.


Cheers


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## PuckiTwo (Oct 26, 2011)

Eclectic12 said:


> Some are because the posted response seemed to be circling back to "buy it on the German accepted exchange" -


Eclectic12, I hope you didn't mean my posts with that because I certainly never said "that it (DT)* should be bought *on the German regulated exchange. The point was that* it is *listed on an "accepted exchange" - quite a difference in meaning. 



Eclectic12 said:


> ....There seem to be lots of easier ways to achieve the same thing ... without the added complications of what CRA may or may not decide.....


Sure, no doubt. Fully agree. It all depends on personal circumstances.


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## canadian_investor (Jul 4, 2011)

OP following up here.
thanks everyone for the great response. you guys are awesome.
special shoutout to @PuckiTwo for the detailed research and enquiries.
i was not expecting such thorough and detailed research.

I spoke to a rep at my brokerage Questrade.
the response was No. this stock cannot be held inside RRSP.
i didn't ask about TFSA. my question was about RRSP.
i am not satisfied that the rep knew the intricacies.
i think he gave a regulation answer from the playbook.

i considered calling back and speaking to a manager, after reading all the information here but I have decided to abandon the idea.
as @humble_pie said it is not worth the trouble.
i have actually been through a similar situation before.
i used to hold an ADR called New Zealand Telecom which is the main telecom company from New zealand (NZT).
great dividend payer and a steady eddy kind of stock.
but they decided NYSE listing was not worth the expense and regulation and delisted from the NYSE and continued trading OTC.
i called Questrade and they said I should immediately sell the position because it will automatically convert to OTC position after delisting and that will not be kosher with the gov.

so i sold the position and gave up nearly a 10% dividend.

with a market correction seemingly underway maybe a regular NYSE traded ADR will soon reach high yield
thanks again all.


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## humble_pie (Jun 7, 2009)

canadian_investor said:


> OP following up here ...


thanks for the update, i like your reactions, they are 100% rrsp appropriate.

there are so many good choices for rrsp, no point fretting over the odd problematic digit that pops up. 

i remember new zealand telecom, i nearly bought it myself! but wound up instead with a US telco ETF that had decent options.


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