# Currency conversion and transferring RRSP to Questrade



## Jungle (Feb 17, 2010)

I am looking for the best method to transfer my RRSP to Questrade and save on converting the funds to USD. I currently hold e-series funds all in CAD and want to start buying USD ETF in RRSP at Questrade. Questrade charges 0.5% fee to convert CAD to USD. My questions would be:

1. Can I exchange my CAD to USD in this TD mutual fund account first?
2. Is the fee cheaper than Questrade? (0.5%)
3. Can I purchase mutual funds in USD, to transfer in-kind to Questrade?

I could sell the USD mutual funds in Questrade (after minimum holding period) and purchase the USD ETF's. Also, I read that USD dividends will be forced converted to CAD by Questrade? 

Any input or other suggestions are welcome.


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## Jungle (Feb 17, 2010)

Maybe the Norbert Gambit is a better option since the account is already in an RRSP.


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## humble_pie (Jun 7, 2009)

i don't believe one can do the gambit in an rrsp because the gambit requires shorting which federal authorities don't allow in a rrsp.

as for your other questions i am a bit puzzled because you say questrade offers better terms for US holdings in rrsp such as a low currency exchange fee, etc.

then you ask about pre-converting cad to usd while still at the td; and about pre-buying the US holdings while still at the td. But why do that, when the whole purpose of the exercise is to gain better terms at questrade.

tdw offers, as you probably know, the well-known usd wash rule for rrsps. If you sell a US security in a td rrsp you can phone them & they will place proceeds in money market fund thus keeping currency unchanged in usd. There are people who complain that phoning tdw is too much bother. But i wonder how many trades per annum we are talking about. This is an rrsp, right. You surely wouldn't be day-trading US etfs in an rrsp, would you.

your last point about the possibility that questrade may force conversion of all rrsp divs & distributions from US etfs into cad is interesting. If this would be true, doesn't it dilute the much-touted value of an all-usd rrsp at questrade.


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## Jungle (Feb 17, 2010)

humble_pie said:


> i don't believe one can do the gambit in an rrsp because the gambit requires shorting which federal authorities don't allow in a rrsp.


That sucks. But for my initial transfer of funds over, I will have to pay Questrade's 0.5% fee to convert; it's stuck in the RRSP shelter. However, I can Gambit new contributions to USD and then just transfer the USD into the RRSP. 



humble_pie said:


> as for your other questions i am a bit puzzled because you say questrade offers better terms for US holdings in rrsp such as a low currency exchange fee, etc. then you ask about pre-converting cad to usd while still at the td; and about pre-buying the US holdings while still at the td. But why do that, when the whole purpose of the exercise is to gain better terms at questrade.


At the time of this post, I was not aware the Questrade's currency exchange fee was cheaper then my described method. I know now, because I just phone TD mutual funds. They told me that the currency fee to switch from CDN eseries to USD mutual fund will be closing price plus (approx) 1%. He did not know the exact percentage, but insisted that it would add at least a penny to the dollar conversion. I calculate that would be +1%. I would love to find out the exact number they use..



humble_pie said:


> tdw offers, as you probably know, the well-known usd wash rule for rrsps. If you sell a US security in a td rrsp you can phone them & they will place proceeds in money market fund thus keeping currency unchanged in usd. There are people who complain that phoning tdw is too much bother. But i wonder how many trades per annum we are talking about. This is an rrsp, right. You surely wouldn't be day-trading US etfs in an rrsp, would you.


I think a wash trade is to stop the brokerage from settling your balance back in CAD. Thus why you purchase a USD money market to let your money sit in USD. WIth Questrade, you can hold USD in RRSP, so no need to wash. 



humble_pie said:


> your last point about the possibility that questrade may force conversion of all rrsp divs & distributions from US etfs into cad is interesting. If this would be true, doesn't it dilute the much-touted value of an all-usd rrsp at questrade.


I contacted Questrade and she said confirmed this is false. US dividend payments will be kept as USD and not force converted.


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## humble_pie (Jun 7, 2009)

still a bit doubtful. We don't "just transfer USD into an rrsp," because such a transfer is actually a new contribution, so it's subject to all the relevant rules & regulations.

i don't know about questrade but i'd imagine that, like other brokerages, they permit swaps into & out of an rrsp. That is, one could transfer USD into an rrsp if one were taking out identically-valued securities. Again, don't know about questrade, but other brokerages charge a sizable fee for an rrsp swap, so it's not something one does routinely.

re the td currency exchange fee: spread between buy & sell is traditionally 1.90% at tdw. In other words, going one way is just under 1%. This is tdw the discount broker. Mutual funds division may have a rate that is slightly greater, ie slightly less beneficial to client, such as 2%.

the dividend/distribution capture in USD that you mention in a questrade rrsp is a valuable feature, imo. Over long periods of time this would probably turn out to be more valuable than the relatively slight difference between questrade currency exchange fee & tdw currency exchange fee (diff is about .45%.)

just out of curiosity, may i ask why you are going long USD at this point in time.


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## Jungle (Feb 17, 2010)

humble_pie said:


> still a bit doubtful. We don't "just transfer USD into an rrsp," because such a transfer is actually a new contribution, so it's subject to all the relevant rules & regulations.
> 
> i don't know about questrade but i'd imagine that, like other brokerages, they permit swaps into & out of an rrsp. That is, one could transfer USD into an rrsp if one were taking out identically-valued securities. Again, don't know about questrade, but other brokerages charge a sizable fee for an rrsp swap, so it's not something one does routinely.


Interesting. I didn't know you could swap your shares in and out of sheltered accounts. 



humble_pie said:


> re the td currency exchange fee: spread between buy & sell is traditionally 1.90% at tdw. In other words, going one way is just under 1%. This is tdw the discount broker. Mutual funds division may have a rate that is slightly greater, ie slightly less beneficial to client, such as 2%.
> 
> the dividend/distribution capture in USD that you mention in a questrade rrsp is a valuable feature, imo. Over long periods of time this would probably turn out to be more valuable than the relatively slight difference between questrade currency exchange fee & tdw currency exchange fee (diff is about .45%.)
> 
> just out of curiosity, may i ask why you are going long USD at this point in time.


Vanguard ETFs. (Also I would love to purchase some individual US stocks on the side). Looking to use low cost foreign ETF to help lower MER's on overall asset allocation.


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## Soils4Peace (Mar 14, 2010)

I have done Norbert's gambit in my SDRSP without shorting, but by buying then selling interlisted stocks in different markets. The problem is you have some exposure to changes in the price of your 'carrier' stock and in currency, as it all goes a bit slower. It worked once in my favour, once against me; but better than paying 2% exchange. If I only had to pay 0.5% on $10-30k I likely wouldn't bother with NG.


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## Jungle (Feb 17, 2010)

Soils4Peace said:


> I have done Norbert's gambit in my SDRSP without shorting, but by buying then selling interlisted stocks in different markets. The problem is you have some exposure to changes in the price of your 'carrier' stock and in currency, as it all goes a bit slower. It worked once in my favour, once against me; but better than paying 2% exchange.


Thank you for your answer. Sounds like it can be done. 
Could someone please explain how this could go short? I have never short sold before. If you are buying outright and then selling again, how is that a short sale?



Soils4Peace said:


> If I only had to pay 0.5% on $10-30k I likely wouldn't bother with NG.


I would be exchanging $20,000, maybe it's better to pay the 0.5% and not Gambit?


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## humble_pie (Jun 7, 2009)

_" ... buying then selling interlistd stocks in different markets ... "_

it always surprises me that brokers allow this. The tricky part is the 3-day settlement. To nit-pick technicalities, the broker should not be journaling stock that a client has just bought in his canadian account over to his US account where it can be sold because that stock has not settled yet or been paid for in CAD. So technically speaking, that client is indeed shorting the US stock. 

however exchanges have rules against "shorting against the box," ie you can't short a stock you are already long.

furthermore, and especially in a rrsp, a manoeuvre such as Peace has described surely requires phone calls to the broker, which means higher agent-handled commissions.

in a pure gambit, the client does everything online at lowest possible commish. Client shorts first in the desired currency. Split second later client buys stock to cover in the currency he is exiting. Some brokers (tdw for example) require phone call later to journal the covering stock over to the short account. Other brokers (bmo for example) are using mainframe systems that can accept the short/long orders & figure out where the stocks & the currencies belong without any additional phone call from client.

btw jungle there are good threads discussing this that you should study if you are thinking about the gambit manoeuvre. There are threads here in cmf. I've been doing the gambit for years, long before i ever heard of norbert. So have hundreds of thousands of tdw clients. I also do partial gambits with option sales.

there's another poster here on cmf who does half gambits. When he needs US cash, he sells 10k or so from an existing interlisted canadian holding. He replaces or not according to his judgment at the time. 

Canadian Capitalist recentlly picked up on the gambit from posts here on cmf & has discussed the gambit in excellent detail on his blog. That's what you should study, because it's searchable, whereas this forum is harder to search.

going back to a rrsp, even if a broker would accept to technically short a stock in USD seconds after the client had gone long the same stock in CAD (which the broker shouldn't), those phoned-in commissions are going to cost $80 or more. However, a swap fee such as i mentioned in a previous post upthread is only about $45. Cheapest of all is an online gambit pair with commish at $10 or lower for each trade.

one last hint. Clients doing a gambit should choose ultra-liquid hi-volume stocks on an exceptionally quiet day, ie with stable pricing. The classic choices for doing the gambit have traditionally been potash & rim/rimm. However, with the explosive news in potash right now, this stock would be a dangerous choice because its trading price is currently too volatile.


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## Jungle (Feb 17, 2010)

humble_pie said:


> _" ... buying then selling interlistd stocks in different markets ... "_
> 
> it always surprises me that brokers allow this. The tricky part is the 3-day settlement. To nit-pick technicalities, the broker should not be journaling stock that a client has just bought in his canadian account over to his US account where it can be sold because that stock has not settled yet or been paid for in CAD. So technically speaking, that client is indeed shorting the US stock.



Worst case, what can go wrong if I try this and it doesn't work? Reject order?


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