# Forced currency conversion



## mrpresident (Dec 9, 2010)

Maybe somebody can direct me in the right direction. 
I feel, like many others, that forced currency conversion in registered accounts is an unethical practice by brokers and banks. It is unethical because it charges you a currency conversion fee that is usually a hidden fee. Second, It is unethical because the broker/bank exchanges your currency both ways without being instructed to do so. Now like the federal government has legislated credit card companies and banks in reference to their fees. I would like to know, where would I start to start the process for banks and brokers to stop doing this. Should I complain to my MP to begin with? 
any suggestions will help, thanks


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## Argonaut (Dec 7, 2010)

Politicians are bigger crooks than the banks. I would just go with a workaround. 

You can use "Norbert's Gambit", which can be found in this forum and elsewhere. Or you can use Knightsbridge, which I haven't used but have heard it recommended by many people. Some online brokers allow you to hold securities in $US now, but I agree, you need to find a cheap way to get the $US in the first place.


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## slacker (Mar 8, 2010)

Vote with your feet. Move your money to those brokers who don't do this. I know Royal Bank and Questrade have USD registered accounts.


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## humble_pie (Jun 7, 2009)

i agree that charging FX fees on the billions of dollars that wash through aggregated registered accounts at both full-service & discount brokers is a highly lucrative practice on the part of all brokerage houses. The mind boggles to think of how much money, in the whole of canada, is being stripped of FX fees in registered accounts every single day.

the problem in trying to bring about change is that things have been this way since time immemorial. FX fees are a pillar of traditional brokers' revenue platforms. I'm convinced they will never cede this practice without a consumer revolt.

for numerous valid reasons, many discount clients can't or won't go to questrade or rbc. To best of my knowledge these are the only 2 brokers with rrsp in USD. I believe that this platform does not extend to resp at those brokers. Not sure about rrif, either. Meanwhile other brokers are working on this issue & say they hope to offer ongoing USD in rrsp within a year. So voting with one's feet is not a practical solution. 

starting by breaking the problem apart into modules that should be reformed, there is the step of acquiring the US dollars in the first place. Then there is the 2nd step of buying & selling US securities in registered. And there is the 3rd step of holding US securities in registered while losing the 1% FX fee on every single USD dividend paid by a US stock into that rrsp.

1) the workaround for the first step is the gambit. Here in this forum, a poster named avrex has demonstrated how he does this flawlessly in his rrsp at td waterhouse. Interested parties could study his posts. Avrex places a pair of low-commish online orders, one after the other, buying a liquid interlisted stock on toronto, then instantly selling the same stock on new york. Surprisingly, and unlike its cash or margin accounts, the td's website platform is configured to support this kind of bing-bang trading in the rrsp. What we don't know, exactly, is whether the tdw tfsa will support the same kind of seamless gambitting. Could anybody who completes a successful gambit in tfsa please report back.

btw while we're on this subject: don't gambit canadian bank stocks. Reason is that cdn bank trading volumes on new york are low because of federal restrictions on foreign ownership of canadian bank stocks. For successful gambitting the investor needs an interlisted stock with ultra high volume both on toronto & on new york. RIM/RIMM is the best candidate imho.

another hint: however, if for any reason an investor will have to place the sell side of a gambit pair with a human representative & thus get charged the full commish - which will still be cheaper than the FX fee for amounts north of 10,000 - choose an expensive interlisted stock like POT, so that the number of shares in the commission calculation will be as low as possible.

2) the workaround for the 2nd step has been perfected by many discount brokers. After selling a US security in rrsp or using the USD proceeds from a successful gambit, client has to immediately buy a house US money market fund. Make sure there are no minimum time restrictions on this fund. Order to buy the US MMF must be placed the same day. TDW reps are highly cooperative with this, can accept orders to buy MMF - they call it "washing" - up to 3 days in advance of a settlement date.

3) other than questrade & royal's USD rrsps, there is no workaround yet for the 3rd step. Every single US dividend or interest or other income dollar paid into a registered account will be subject to the infamous FX currency fee. This is where massive consumer pressure could cause the other brokerages to hasten their process of reconfiguring their websites to support USD in registered accounts.

whom to pressure ? writing one's MP would not be effective imho, at least not at first. One could instead work through the levels at one's discount brokerage. Don't stop with the so-called customer support staff. Go on through levels of regional managers to the discount brokerage president to the ombudsperson for the bank, if it's a bank-owned brokerage. There are provisions for going beyond, to the superintendant of financial institutions.

if it were myself, i'd allow at least a year for all these levels, because one must wait for a reply from each level. If one were truly passionate about this cause, at a certain level in the progression one could start copying one's member of parliament, and possibly also try to interest the traditional media (they know all about the problem; they'd be looking for a new spokesperson who'd make an interesting story.) Along the way one would coordinate with groups known to be interested in the cause, for example the Canadian Association of Retired Persons.

if i were doing all this, i'd keep the focus of my argument upon moral suasion, that is, upon the social justice of not charging exorbitant FX currency fees on US income accruing to every canadian citizen's modest retirement fund ...


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## Four Pillars (Apr 5, 2009)

slacker said:


> Vote with your feet. Move your money to those brokers who don't do this. I know Royal Bank and Questrade have USD registered accounts.


+1


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## m3s (Apr 3, 2010)

Questrade - 0.5% currency spread and no forced currency conversion

Why pay more for less?

As far as politics go, is it beneficial to make it easier for Canadians to invest in other currencies? We could always just switch to the USD a la Euro to eliminate this barrier, but I think we want to keep our own currency.. As a Canadian politician, do they not want to encourage Canadian investment in Canada? I could be wrong because RRSP does allow you to hold USD which only Questrade/RBC have taken advantage of. I wouldn't be so quick to paint them all with 1 brush as crooks though


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## OhGreatGuru (May 24, 2009)

mrpresident said:


> Maybe somebody can direct me in the right direction.
> I feel, like many others, that forced currency conversion in registered accounts is an unethical practice by brokers and banks. It is unethical because it charges you a currency conversion fee that is usually a hidden fee. Second, It is unethical because the broker/bank exchanges your currency both ways without being instructed to do so. Now like the federal government has legislated credit card companies and banks in reference to their fees. I would like to know, where would I start to start the process for banks and brokers to stop doing this. Should I complain to my MP to begin with?
> any suggestions will help, thanks


_that forced currency conversion in registered accounts _
What difference does it make if this is in registered or non-registered accounts?

_ It is unethical because it charges you a currency conversion fee_

Let's see, you pay the financial institution in $CDN, to buy foreign stocks (whether directly or in a foreign equity fund). They have to convert your $CDN to foreign currency to buy foreign stocks. There is an exchange cost for that. How is this unethical?

_Second, It is unethical because the broker/bank exchanges your currency both ways without being instructed to do so._

You tell the institution to sell some of your shares. When they sell the shares they are paid in foreign currency. To pay you in $CDN they charge you the exchange rate. How is this unethical?

_any suggestions will help, thanks_

As noted by others, there are alternative types of investments available: currency neutral funds; US dollar funds.

Having said all that, the institution probably is making money on conversions. To start with, converting currency is a revenue generator for any institution. Secondly they may not really pay currency exchange on every transaction - just the daily net of purchases & redemptions. (although in brokerages maybe they do to protect their own currency exposure?


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## m3s (Apr 3, 2010)

It seems all too common to be screwed over in Canada by the lack of competition and government's inability to look out for consumer's interest

I forgot to mention my new solution to this problem:

Buy stock in the big banks, and other companies that nickel and dime us to death. I don't mind being ripped off so much when the dividends more than cover it.


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## Four Pillars (Apr 5, 2009)

mode3sour said:


> It seems all too common to be screwed over in Canada by *the lack of competition* and government's inability to look out for consumer's interest
> 
> I forgot to mention my new solution to this problem:
> 
> Buy stock in the big banks, and other companies that nickel and dime us to death. I don't mind being ripped off so much when the dividends more than cover it.


"lack of competition"

Once again - there is competition in Canada, but you have to get your a$$ off the couch in order to take advantage of it.

If you have your money in a discount brokerage where you are paying high trading and currency exchange fees and you don't like it. Do something about it or stop complaining!! 

There are options.


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## Jungle (Feb 17, 2010)

Why not just switch brokerages??? I think Questrade will pay the transfer out fee for accoutns over $25k.


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## m3s (Apr 3, 2010)

Four Pillars said:


> "lack of competition"
> 
> Once again - there is competition in Canada, but you have to get your a$$ off the couch in order to take advantage of it.
> 
> ...


Competition is not that same as in the US, and it doesn't work if most Cdns are too lazy to take advantage of better deals


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## Four Pillars (Apr 5, 2009)

mode3sour said:


> Competition is not that same as in the US, and it doesn't work if most Cdns are too lazy to take advantage of better deals


It's not quite as cheap as the US, but there are pretty reasonable options.

The fact that some people are lazy has nothing to do with whether competition works. Some people just won't help themselves.


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## humble_pie (Jun 7, 2009)

questrade is not an option for serious investors.

questrade costs for orders of 1000 shares or more are higher than commish at the big bank-owned onliners. Questrade costs include 9.95 commish + ecn fees + cost of data package, which must be bought because free questrade quotes are rudimentary.

meanwhile the going commish at the bank-owned is 9.95 or less, with no ecn & perks thrown in for free. Plus tdw for one has 30 or 40 quality research tools, all free, although several - like insider trading reports - are expensive to buy on one's own.

and what's this about a questrade 9.95 commish for no-load mutual funds ...

serious investors at big bank-owned shops already have free rrsps, free tfsas, free resps, free transferring, free streamers, even unlimited free chequing directly on the accounts in both CAD & USD. Not to speak of flawless order execution & superb customer service. USD transactions can be workedaround.

think about it. What owner of a portfolio in the hi-6, 7 or 8 figures is going to hand that kind of money over to an unknown privately-held newcomer institution, with no known capitalization figures, no clear banking relationship, and an owner who is reluctant to even reveal his name. Just that last fact alone is enough for serious money to push questrade off the radar.

and think some more. Why do so many of the big institutional financial managers keep all of their clients' portfolios at td securities. None keep them at questrade. (A: because the big green has low-cost, ultra-efficient custodial & trading services, well-established spotless reputation, full public disclosure.)

where i think questrade is to be congratulated is for having figured out to perfection how to attract the small or beginner DIY market. With nimble, innovative, spot-on services & marketing.

the big bank brokers may be missing the boat here, imho, because today's kiddie-pops are going to be tomorrow's significant investors. The bank shops could & should be working much harder, i think, to capture brand loyalty among youth, students, women & first nation investors.


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## Jungle (Feb 17, 2010)

Well in the last 2 years, we have seen commissions come down at the big bank brokerages (i trade, waterhouse, with min balance) etc, I think because questrade was doing $4.95 trade, interactive brokers was cheap, q trade good. 


Maybe, like above, competition will force the big banks to hold other currency in registered accounts. This way they can have a more pie in the market share.


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## Four Pillars (Apr 5, 2009)

humble_pie said:


> questrade is not an option for serious investors.
> 
> questrade costs for orders of 1000 shares or more are higher than commish at the big bank-owned onliners. Questrade costs include 9.95 commish + ecn fees + cost of data package, which must be bought because free questrade quotes are rudimentary.
> 
> ...


Very well put!

Bottom line is that you have to evaluate the various strengths/weaknesses of the various brokerages in terms of YOUR needs and make the best choice. Move to a new brokerage if necessary.

I would argue that Questrade is still ok for a large passive portfolio. Regardless, once you get over $100k, the trading commissions at most brokerages become quite reasonable, so they aren't really a factor.


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## humble_pie (Jun 7, 2009)

U R so right. It's the innovative small shops that have forced the big banks to reform.

where i fault the big banks is they're not proactive. It's not enough for them to say to themselves, oh dear, look at all that youth money going to the deep discounters, oh dear, maybe we could do something truly daring like gasp!! drop trading threshhold to 50k.

what the big banks could be doing is planning more creatively for emerging markets that won't pay back for at least a decade. If i had any impact on strategic planning at a bank onliner i'd be focusing on youth investors, student investors, women investors, young parent investors, immigrant investors & first nation investors. For the latter, think land claim & residential school settlement funds.

i'd find out what each group really wants & needs. Its dreams, its fears. For some, i'd also plan how to build in investing safeguards, as some cohorts could be vulnerable as new investors.

i'd give them everything - services, tools, mentoring, peer counselling in person or via the internet - at low prices. Possibly even some loss leaders. I'd be looking to build brand loyalty. Not expecting a return for a decade or more.

... but then, they never asked me ...


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## Lephturn (Aug 31, 2009)

I'm not sure if the others have followed suit yet - but RBC Direct Investing lets you hold both CAD and USD in your RSP. So when you sell (or buy) US securities, you can choose to use your USD or CAD cash (if buying) and choose to sell and get USD or convert it to CAD.

With their commissions down to $10 now, they are not too horrible. So if you want a big bank AND to avoid the forced conversion you can move to RBC.


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## mrpresident (Dec 9, 2010)

Ohgreatguru, 
With all due respects , I am not here to debate whether this is unethical or not. The Word "Forced" should give you a clue as to whether this is unethical or not. The issue here is that we Canadians always get the short end of the stick, and this is with everything , cost of internet , phone , cellphones, hydro , etc. Our society restricts competition and encourages monopoly, and that is why we always get screwed.
I remember many years ago when I was tired of paying 30 dollars to buy or sell stocks with TD waterhouse and tried to open an account with a US broker, Do you think I was allowed? I could have opened an account if I was from Uganda, but from Canada? No way. and when I called they said that it was Canadian regulations that did not allow me to open an account.
Like I said before, my issue is that for example I buy 10 thousand dollars worth of Microsoft and pay 9.99 for the trade. As it turns, and assuming that they only have a premium of 1%, I would be paying 100 dollars for the conversion and 10 dollars for the commission. I understand that I have to pay for a conversion, but only once, Once I exchange the funds and I sell the stock, I want that money to be kept in US dollars. You can do that in non registered accounts( US dollar account vs Canadian dollar account) but you don't have that liberty with RESPs, RRSPs and TFSA accounts.
There is a case in court against Royal Bank and the result is pending. 
And I understand that I can do some manouvres to circumvent that ( washing trades or outright changing brokers), but the issue is that I should not have to do that. 
Investing in the American market is important for me, because imo the TSX is too heavy on commodities and resources in general and i want to start trading actively a portion of my children's RESP, my RRSP and TFSA accounts.
The issue is to put politicians from different parties against one another, and once this issue is exposed to the media something is usually done about it.


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## Lephturn (Aug 31, 2009)

mrpresident said:


> Like I said before, my issue is that for example I buy 10 thousand dollars worth of Microsoft and pay 9.99 for the trade. As it turns, and assuming that they only have a premium of 1%, I would be paying 100 dollars for the conversion and 10 dollars for the commission. I understand that I have to pay for a conversion, but only once, Once I exchange the funds and I sell the stock, I want that money to be kept in US dollars. You can do that in non registered accounts( US dollar account vs Canadian dollar account) but you don't have that liberty with RESPs, RRSPs and TFSA accounts.


Yes you DO have the option to do that in registered accounts.

http://www.rbcdirectinvesting.com/us-dollar-plan/faqs.html

It's just this year, but you can do it. The only exception is RESPs. It was not "regulation" it was the broker allowing it. I know some of the other bank brokerages allow this as well, but I don't know off the top which ones.

I didn't have to do anything - they just turned on the ability to do this in 2010 in registered accounts. Now when I put an order in I can choose to settle it from USD or CAN cash within my RSP. If I need to convert a decent sized chunk of currency I will call them and negotiate a better rate than if I just did it online.


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## HaroldCrump (Jun 10, 2009)

It appears that Scotia iTrade has now joined the bandwagon of supporting registered accounts in USD.

They are, however, charging a flat fee of $30/year for this type of account 
(roughly the same as what would cost an investor to do the "gambit").

See:
https://www.scotiaitrade.com/splash/US_RRSP.shtml

Not quite the same thing as what Questrade offers, but nearly there.

So it would appear that the popularity of the gambit, relayed over the internet using forums like this one and the FWR, has brought about this change from the big bank brokerages.


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## humble_pie (Jun 7, 2009)

that scotia USD rrsp fee is $30 per quarter, or $120 per annum, which is pretty steep. It's no bargain.

https://www.scotiaitrade.com/splash/US_RRSP.shtml

there seem to be countless little niggly details that differentiate one brokerage from another. For example i'm not at all convinced that the 3 (so far) USD rrsp brokerages are all paying US dividends straight up in US dollars. This would be difficult to configure in rrsp. I'd want to double/triple confirm - often the frontline representatives at online brokerages in these busy times hardly even know what they are saying.

brokerages other than the 3 are paying dividends from US securities in CAD, i presume. So clients are paying an FX fee right there. If clients hold US securities for long periods of time, as investors usually do in rrsp, the cumulative FX fee over many years can be substantial. It's at least 1% per annum. Compounded. Sometimes over 20 or 30 years. Ouch.

to focus on the cup which is half full, and on the work that has been done here on this forum to clarify USD in rrsp:

1) it is easy to gambit original amounts of CAD into USD within rrsps at some online brokers including tdw, bmo & i believe royal. Through a simple pair of buy/sell orders, the investor can exchange his CAD into USD without any FX fee whatsoever. One poster in cmf moneyforum has provided detailed instructions.

2) 2 brokers - questrade & royal - are offering free rrsp in USD, although i believe royal may be for a limited period of time only. It remains to be discovered what, exactly, is happening with the dividends from US payors.

3) 1 broker - scotia - offers a USD rrsp at a discouraging annual fee of $120.00.

4) tdw is saying that the ISM mainframe system it leases from ibm is preventing an all-USD rrsp. There is probably merit to this claim. The big green is also said to be building its own mainframe, as it has long had other issues with ibm's ISM. Presumable the tdw in-house system will offer US rrsp some year in the future.


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## HaroldCrump (Jun 10, 2009)

sth* I missed the part about the $30 being quarterly vs. yearly.
Yeah $120 is no bargain.
The news flash doesn't clarify the issue with dividends either.
At this time, it seems Questrade has the most comprehensive, no fine print true USD RRSP.


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## humble_pie (Jun 7, 2009)

... to continue with the detail-niggling, i am not sure that one can gambit one's initial cache of rrsp CAD into rrsp USD at questrade. I know they offer forex trading but i don't know if this applies to rrsp or just to non-registered or forex accounts.

somebody posted here that the questrade FX fee is lower than say td's ... but it is not a helluva lot lower. One would always be better off gambitting, if one could.

another niggle: at most firms where one can gambit the currencies, like td, bmo, royal, one can also gambit in tfsa. But as far as i know - & i'll gladly be the first to stand corrected - there are no USD tfsas yet at questrade.

what everything boils down to is individual investing patterns. I'm not one, but an investor with an rrsp that's heavily-weighted in US securities, with that rrsp being heavily-weighted in his global portfolio, is going to consider his broker choices carefully.


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## HaroldCrump (Jun 10, 2009)

humble_pie said:


> ... to continue with the detail-niggling, i am not sure that one can gambit one's initial cache of rrsp CAD into rrsp USD at questrade.


Right, but you can deposit USD directly into your USD RRSP account at Questrade, without going through any conversion or gambit.

So all you need is two types of RRSP accounts - CAD RRSP and USD RRSP.
Hold all US denominated securities in the USD RRSP account and Canadian ones in the CAD account.

How and where you acquire your initial stash of USD is a different matter.
Most folks (I assume) have USD chequing accounts - or can get one easily at any of the banks.
Or the initial stash of USDs can be acquired through your regular trading brokerage via gambit or otherwise.



> But as far as i know - & i'll gladly be the first to stand corrected - there are no USD tfsas yet at questrade.


well, their websites states that they have USD TFSA, RESP and other types of registered accounts.
http://www.questrade.com/trading/registered_accounts_usd.aspx#glossary

Maybe a Questrade user can confirm whether this is true...


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## humble_pie (Jun 7, 2009)

ah, but acquiring those USD in the first place is the challenge.

most canadians i would think are paid in CAD. So they have to convert the currency. Brokers' trading platforms that permit gambitting within rrsps are valuable. Trading platforms that require the USD rrsp holder to deposit into his rrsp in USD in the first place are not relieving this investor of the FX cost. Instead they are just pushing the FX operation out to some other location.

_" Or the initial stash of USDs can be acquired through your regular trading brokerage via gambit or otherwise."_

this is not quite true. It can be difficult and sometimes impossible to gambit currencies in non-registered accounts.
in general brokers do not want to cooperate with this.

some trading platforms are more accommodating to gambits than others.

on non-accommodating trading platforms, the investor/gambitter must obtain the good will of his broker in order to execute one gambit side, and the broker has the right to refuse.


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## slacker (Mar 8, 2010)

*Thanks all.*

I just want to note that I was successful in executing Norberts Gambit in TD Waterhouse RRSP account with 2 online trades.

1. Bought shares on Canadian market for Royal Bank (RY)
2. Sold shares on US Market for Royal Bank (RY)

The whole thing was done in less than 1 minute.

At 11:22 AM, Google listed 1 USD = 0.988904492

At 11:24 AM, I check the exchange rate offered by TDWH 1 USD = 0.9747. That's approx. 1.44% advantage to TD.

At 11:29 AM, I bought TSE:RY at $54.19

At 11:30 AM, I sold NYSE:RY at $54.795

To sum,

1. The exchange rate I got was 0.9890 instead of 0.9747 offered by TD.
2. I paid $20 of trade fees
3. I saved about $230 in fees.
4. Don't forget to call TDWH afterwards to get them to wash your trades.

No need to call them to the the gambit, no need to "journal" whatever that means, no secret handshake required. Just buy on TSE, and sell on NYSE. Does this work on other brokerage too? I'd like to see more examples and experiences.


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## CanadianCapitalist (Mar 31, 2009)

Thanks for posting your experience slacker. It's very good to know you can execute the Gambit in a TDW RRSP account without journaling over. I wonder it's worth executing the Gambit in a RRSP account for conversions of as little as $2,000 (2*commissions / 0.15) for those paying $10 for a trade.


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## humble_pie (Jun 7, 2009)

we really should hand the kudos to cmf member avrex who was the first to post a detailed instructional message, here in this forum, about how to gambit 100% online in tdw rrsps. Anyone attempting to do the same would likely benefit from consulting avrex' post.

at tdw, online gambits only work in rrsp accounts. The big green rrsp trading platform was designed to support a monocurrency account in which clients could nevertheless buy & sell in both CAD and USD. A by-product of this design is that gambitting between the currencies does work, as long as the client remembers to contact tdw by the end of the day to request that his US trades be "washed."

however, non-registered accounts at tdw do *not* function like this. Trading platforms for tdw cash & margin accounts require a licensed representative to carry out one side of any gambit. Since brokerages don't want this kind of business, no representatives are ever trained as to how to execute a gambit strategy. This is the reason why some will legitimately refuse, or will suggest waiting 3 days for the buy side of a gambit to settle.

as mentioned several times previously, brokerages whose trading platforms are built upon the ADP mainframe system are easier to gambit. TDW is using the ISM system, which is more difficult to gambit.


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## CanadianCapitalist (Mar 31, 2009)

humble_pie said:


> we really should hand the kudos to cmf member avrex who was the first to post a detailed instructional message, here in this forum, about how to gambit 100% online in tdw rrsps. Anyone attempting to do the same would likely benefit from consulting avrex' post.


+1. Thanks to avrex as well. It's very convenient to gambit RRSPs without making a "journaling" call. It's a useful reminder not to forget to call to wash the trade into the TD US Money Market Fund for CAD to USD conversions.

Avrex's post is here:
http://www.canadianmoneyforum.com/showpost.php?p=43187&postcount=28


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## Four Pillars (Apr 5, 2009)

Anyone know if you can do this at Questrade?


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## avrex (Nov 14, 2010)

humble_pie said:


> kudos to cmf member avrex who was the first to post a detailed instructional message





CanadianCapitalist said:


> +1. Thanks to avrex as well.


Ahh, gee guys, thanks. 

Coming soon. I have a non-registered account with Scotia iTrade that I need to gambit on, to get some US currency. 
I'll let you know how that one goes.


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## Jungle (Feb 17, 2010)

Thanks for posting this guys, this makes things..almost perfect with TDW. 

Self directed RRSP's and vanguard etfs, here we come!


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## humble_pie (Jun 7, 2009)

landed a perfect double-somersault-half-twist ski jump in rrsp last week.
took off at the top of the mountain with canadian arc energy;
flew into space to sell arx on toronto (somersault) buy manulife on toronto (somersault) plus sell manulife on new york (twist);
landed far down the hill with a US telco buy.

free lift pass.
no FX fees.
not quite as fun as skiing powder at le Massif, but close.


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## dcaron (Jul 23, 2009)

I want to NG from CAD to USD, and want to use TLM as the instrument. The end result is to buy three Vanguard ETF's (VTI, VWO, VEA). 

I tried an experiment last Friday with my brokerage within my regsiteed LIRA account. I bought 800 shares of TLM-T and sold 800 TLM-N @ ask+bid price to get my orders filled quickly, and the did. I did not need to call the brokerage to sell on TLM on NYSE, since their web order interface has the (Canadian/American) Market choice field. I noticed the proceeds from the TLM-N sale, was exactly a factor of 1.03 above my costs for the purchase of TLM-T. On Friday, the CAD/USD was exactly @ 1.03. So I think I did this for the price of 2 trades @ $9.95.

As a newbie, I called for support while I was doing this. The rep seemed confused, and after he realized what I was doing, he warned me not to do this in the future. I dont see why I should not, and I am planning to do this again in my other registered RRSP account. Now to stay under the radar, Im wondering if its best to ask them to wash the trades before or after my final purchase of ETF's? 

My discount broker is NBDB (National Bank Direct Brokerage), which does not provide a USD account.

Thanks.


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## humble_pie (Jun 7, 2009)

caron it's not quite clear whether in your LIRA last week you proceeded on to buy the vanguard etfs in USD as soon as you had sold tlm on new york.

guessing ... i'd guess that you did not so proceed.

first, the representative. It must have been the first time he found himself involved in such a trade. It's not surprising he sounded confused. The brokers don't support do-it-yourself-no-FX-fee gambitting, so there's no reason for them to train their reps to help the clients.

imho the rep was somewhat wrong when he warned you not to gambit again. Also imho, i believe you are right when you say you don't see why you cannot.

there's nothing illegal about gambitting. Arbitrage traders do this all day, every day, all the time. Gambitting is exactly what they do. Have done since time immemorial.

what is new is that ordinary discount investors have discovered the technique & are busily teaching each other through the internet. What i sense is that a large-scale cat-and-mouse game is being played out. The big cats - the onliners - are sitting there, kind of amazed, still trying to figure out how to respond, while increasing numbers of smart little mice keep on jumping through the breach.

all this should be sending one mighty message to the top brokerage nobs. A message that says We. Want Cheaper. FX. Rates. Now.

i don't know the nat bank trading platform at all, so it would be wrong for me to comment. In particular, it's not clear to me whether nat bank rrsp can hold a US stock in USD - notwithstanding the fact that this holding will probably be reported in CAD in the account.

assuming the answer is yes, nat bank can hold US stocks & etfs in registered accounts, then here is the sequence of steps i'd go through at my broker in order to move from a canadian stock such as talisman to vanguard etfs in USD.

- client sells the interlisted stock tlm in USD on new york;
- client then immediately buys the final or destination US security in USD with proceeds of above sale; *
- if a small amount of USD cash is left over, this is the amount that has to be "washed," usually into a money market fund.
- note that most of the US dollars have migrated from positive (proceeds of talisman US sale) to negative (purchase of US vanguards) all during the same day; therefore no need to wash these dollars because at the end of the day they are locked down in the newly-purchased US securities.

* i am assuming, but i do not know for sure, that nat bank trading platform is able to recognize that the proceeds of a sale (talisman) that has been executed only seconds before are now fully available to purchase a new security (vanguard) ... at least, this is how it works on other brokerage platforms.


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## dcaron (Jul 23, 2009)

Since NBDB does not provide a USD account, I'm assuming they would allow the proceeds to be placed temporarily in some sort of hidden USD Money fund. I would then be capable of using these proceeds to purchase Vanguard ETFs. 

I did not notice anything like a temporary holding space, or MM fund anywhere on the web interface. The rep just told me how many USD I had from the TLM-N sale, and subtract three trades @ $9.95$.

I went from what the rep told me I could use, which equated to exactly 800 TLM-N stocks @ bid price (slightly higer than TLM-T ask price). Even before I called them, I noticed the order got filled as per the "order status", but I decided to call them before proceeding with the final purchase of Vanguard ETF's.

There was no distinct money market fund I needed to draw from. No USD account to draw from either, since USD accounts are not yet available at NatBank. I checked the transaction history the next day, and confirmed that the sale proceeds were exactly what the rep quoted me.

Summary is that I purchased 800 (100+700) TLM-T shares, sold 800 TLM-N shares, purchased 200 VTI's, 60 VWO's, and 80 VEA's.
Did all of this on the same day (4/1/2011), before settlement date (4/6/2011)!


Account currency	Settlement date	Operation	Description	Symbol	Symbol currency	Quantity	Price	Net amount	Exchange amount	Comm.
CAD	4/6/2011	Buy	TALISMAN ENERGY INC	TLM	CAN	100	24.03	-2404.04	0	1.24
CAD	4/6/2011	Buy	TALISMAN ENERGY INC	TLM	CAN	700	24.03	-16829.71	0	8.71
CAD	4/6/2011	Sell	TALISMAN ENERGY INC CONV EN CAD @5.1 %US DISC TRANS. ELECT. EXPRESS	TLM	CAN	800	24.86	18863.94	0	9.95
CAD	4/6/2011	Buy	VANGUARD TTL STK MRKT ETF CONV EN CAD @5.1 %US DISC TRANS. ELECT. EXPRESS	VTI	USA	200	69.21	-13145.5	706.45	9.95
CAD	4/6/2011	Buy	VANGUARD MSCI EMERG MKT CONV EN CAD @5.1 %US DISC TRANS. ELECT. EXPRESS	VWO	USA	60	49.72	-2840.5	152.65	9.95
CAD	4/6/2011	Buy	VANGUARD MSCI EAFE ETF CONV EN CAD @5.1 %US DISC TRANS. ELECT. EXPRESS	VEA	USA	80	37.69	-2870.87	154.28	9.95


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## humble_pie (Jun 7, 2009)

as long as the US sell trades & buy trades are done on the same day, brokers do not need to transfer USD in registered accounts into any US money market or similar.

in effect, the investor who sells tlm in USD & immediately buys vanguard etfs in USD is "washing" his own currency.

you see, it doesn't matter what kind of US security the USD gets washed into. In your case, you already know you wish to hold vanguard etfs, so your wash is straight into these securities.

in other cases, an investor may have not yet decided which US securities he should buy. So he buys a US MMF, thus washing funds into the mmf & locking down the US currency.

hint: because monocurrency registered accounts in CAD show transactions in CAD only - & often with the broker's harsh FX fees built in - the investor who is gambitting should take copious notes for each transaction as he works his gambit.


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## dcaron (Jul 23, 2009)

Just successfully completed my second gambit today, at NBDB (National Bank Direct Brokerage). Here are the steps, which took 30 minutes end-to-end:


 Identified selection of NG-worthy stocks on the GlobeFund stock filter and looked for TSX common stocks with Min price>50, Min volume>1 million. The 7 results were RIM, RY, BNS, TD, POT, TCK.B, DAY.DB.C. Out of those, the least volatile were BNS and TD, with very narrow bid/ask spread, perfect for the Gambit.

 Calculated how much I needed to buy to reach the amount of $ I wanted to convert ($60,000CAD)
 Placed limit order to buy 1000 shares of BNS-T @ $59.468 (used ask price to get order filled immediately)
 Placed limit order to sell 1000 shares of BNS-N @ $61.500 (used ask price to get order filled immediately)
 Placed limit order to buy 240 shares of VWO, 320 shares of VEA, and 530 shares of VTI (used ask price to get order filled immediately).
 Called National Bank Direct Brokerage to wash my trades before market close.

All done in one day, one phone call to wash the trades, and no need to wait until settlement date.


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## avrex (Nov 14, 2010)

+1


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## humble_pie (Jun 7, 2009)

ah, but can you do that in non-registered.
registered trading platforms tend to be more accommodating.

here's where the men get separated from the boys.


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## slacker (Mar 8, 2010)

@dcaron: you just saved yourself $900. Very happy for you.


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## pessimist (Dec 11, 2009)

*Why didn't this work for me?*

Hi. I tried to do the Norbert in my RSP with TD Waterhouse and got dinged for currency conversion. I am signed up for automatic wash trading. I was wondering if you guys could point out any errors in this process. 

Step 1- Bought 125 shares of POT @ 52.95 CAD per share.(my confirmation shows $6628.75-9.99fees)

Step 2- Sold 125 shares of POT @54.42 USD per share within a few minutes.(my confirmation shows $6802.5-9.99-261.51)

While I was doing this, a check box appeared asking me if I wanted to convert my currency. I said yes. Was this the mistake? My transaction was not going through without the check in the mark). 


Step 3 - Called TD anyway to do a washtrade. It looks like the actual transaction did not happen until 3 days later. (my confirmation shows 6792.37-261.51)

So my confirmations that arrived a few days later shows a 3.85% currency conversion hit. Yikes. I'd appreciate any thoughts on what exactly went wrong here. Thanks. 

P


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## avrex (Nov 14, 2010)

pessimist said:


> So my confirmations that arrived a few days later shows a 3.85% currency conversion hit. Yikes. I'd appreciate any thoughts on what exactly went wrong here. Thanks.


I'm guessing that you did get the proper currency convrersion. It's just that the TDW Transaction Confirmation statements are truly confusing. 

I don't know why they do it the way they do it. Even if an individual transaction is in USD, they still want to show you what the amount would have been in Cdn dollars.

So don't be a pessimst.  Let's review. 

You should have the following 3 TDW Transaction Confirmation statements:
Trans 1.  Buy POT-T
Trans 2. Sell POT-N
Trans 3.  Buy TD US M/MKT U$


Trans 1.  Shows that you bought $6618.75 - 9.99 comm. This is all in Cdn dollars, of course.

Trans 2.  Shows that you sold 125*54.42 
Which is 6,802.50 -9.99 comm - 0.93 tax = 6,791.58 USD.

This is the important number. Let's call it 'A'. Your transaction resulted in you getting *A = 6,791.58 USD*

Now for some reason, Trans 2 will continue and document an amount in Cdn dollars. You'll see something like "Less Discount on USD funds converted at ...%". I don't know why they want to show us a Cdn dollar value

Trans 3. 
The first line of this transaction (the gross transaction amount) is the most important. Let's call it 'B'.
*B = 6,791.58 USD*

Trans 3 will continue and document an amount in Cdn dollars. You'll see the same "Less Discount on USD funds converted at ...%". 

*The important thing is *that the amount USD you gained from Trans 2 is deposited in Trans 3 to USD your money market fund.

*A = B = 6,791.58 USD*

My numbers may not be 100% correct, but this is my best guess as to what has occurred here. I hope this helps.


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## gibor365 (Apr 1, 2011)

Those bank are doing everything so confusing and imho doing it on purpose in order to earn $$$ on ridiculous FX fees. Recently I sold in Investor Edge AGNC and wanted to park money in US Money Market fund.... I spent on the phone about 2 hours , talked to rep 3 or 4 times, and still I don't understand if I paid FX rate as my account shows everything in CAD... Now in order to buy US stock I should again spend hours on the phone and ask then to lock rate as first I need to convert US MM into CAD cash and than to buy US stock...

Why they just don't allow to keep US $ money in registered accounts


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## humble_pie (Jun 7, 2009)

hello pessimist perhaps avrex is right, he has never been wrong before !

but alas the reaction i had upon seeing your numbers is that they did convert to CAD, for the reason you've already figured out - that window asking if you wanted to convert the curency & you checked off Yes.

i don't remember exactly the frames or steps one moves through when doing td rrsp gambits. But i'm pretty sure i would *not* check to convert the currency because i *would* be trying to force the trade to resolve in USD.

as you say, you wound up with 6802.50 USD less USD 9.99 commish - and then you have a further debit of 261.51, which i'm not sure what that is. At first i assumed it was the FX fee, but now i believe it's slightly too high to be an FX fee.

one last point. Horizons betapro has introduced 2 new funds, DLR & its identical US dollar twin DLR.U, which both trade in toronto & have the same cusip number. There is no journalling for the tdw system to carry out, since both trades settle on the same exchange.

horizons has a tiny management fee of only 2 per mil each for running these funds, so this cost is very fair & manageable.

i haven't tried DLR in rrsp yet, but it should be possible to buy DLR in CAD on canadian market in tdw rrsp, then instantly sell DLR.U in USD on canadian market - note, leave currency conversion box unchecked - and end up with US dollars. You say you are automatically washed, so the USD should be safely folded into US mmf by settlement day.

note: the foregoing is for registered accounts only. Non-registered are a different story. Get into that another time.

the appeal of the DLR/DLR.U combo is that there is not likely to be any shift in their values during the moment it will take to send in the 2nd sell trade. By contrast, stocks used in gambitting can shift in price quite rapidly, which is a handicap.


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## gibor365 (Apr 1, 2011)

"i haven't tried DLR in rrsp yet"

TDW rep confirmed that DLR/DLR.U gambit is possible ONLY for non-registered accounts


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## humble_pie (Jun 7, 2009)

people are way too naiive about trusting everything that every broker licensed rep has to say about anything at all.

it's not the fault of the licensed reps. There's far, far too much information in their domaines for them to even begin to know everything. They are required to process X number of queries per day. On gambitting, the reps are not trained or supported to know anything whatsoever.

so the average rep in the general queue, faced with an oddball far-out-in-left-field question about DLR gambitting, is going to answer the best way he can ... what he's heard, what his comrade in the pod tells him, etc ... but such answer on DLR gambitting will be off the cuff. Foolish indeed is the client who believes everything he's told.

in particular i have noticed that even the tdw elite representatives - and i do have access to the very best - are not particularly knowledgeable about some obscure aspects of their webbroker interface; and they are strikingly & noticeably unknowledgeable about rrsp gambitting using electronic orders only. I for one have far more confidence in the reports & how-to gambit advice of *avrex* here in cmf forum, for example.

bref, we are boldly going where no man has ever gone before etc etc. And a bird in the hand from a reliable cmf poster is worth two in the bush from an overworked broker call centre representative etc etc. And don't count your chickens before they hatch etc etc.

the only way to know if DLR/DLR.U works or does not work in tdw rrsp with a pair of online gambit orders is to experiment. Try the gambit out in real time.

when i get around to doing this - have no need for USD in rrsp at present - i'll post the results. In the meantime my opinion is that this question is totally open & has not yet been properly answered.


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## pessimist (Dec 11, 2009)

*The check box*

Thanks avrex, humble_pie, gibor for the replies. I will call TDW and try to get more information on what the $260 fee is.

If you could keep an eye out the next time you do this yourself and let me know if you can do the transaction without checking the checkbox (and for mysterious numbers in the confirmations), I'd appreciate this. Thanks. 

P


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## humble_pie (Jun 7, 2009)

will do, pessimist 

i do believe the td reps will help you understand what happened.

what i find useful myself when gambitting in tdw rrsp where so many results pop up in canadian currency, is to scribble down all figures for each & every step of a gambit. I only do about 2 per year in rrsp. So far mine have worked out perfectly. They are a bit tricky to follow, as the results only conclude over the next several days.

also i've wished to track my rrsp USD purchases in USD so i have been fooling around w their portfolio manager. One has to create a custom portfolio with the original USD purchase prices both per share & for the total holding. The default portf manager won't give the information that i wish to have.


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## humble_pie (Jun 7, 2009)

ps by scribble down all figs in a gambit i mean go overboard.

even if the window is showing a transaction mostly in CAD, i will hand-calculate & scribble down the USD transaction, eg share price x no of sh, plus or minus commish in USD, etc. It has always surprised me a little when my scribbled calcs have turned out to be - after a few days & after all the dollars get safely tucked away in new US securities - it has always surprised me that my scribbled calcs were correct.


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## cedebe (Feb 1, 2012)

pessimist said:


> Hi. I tried to do the Norbert in my RSP with TD Waterhouse and got dinged for currency conversion. I am signed up for automatic wash trading. I was wondering if you guys could point out any errors in this process.
> 
> Step 1- Bought 125 shares of POT @ 52.95 CAD per share.(my confirmation shows $6628.75-9.99fees)
> 
> ...


I realize this is an old post, but the same thing just happened to me while I was online with a TDW rep.

The rep was a bit surprised by this, too, so he transferred me to another rep who assured me that my trade was not going to be subject to TDW's exchange rate because I had signed up for 'auto wash' the night before. 

I'm still a bit uncertain as to the final $ amount... bought 10,653 CAD; sold 10,704 US; and see 10,505.99 (CAD) sitting in the Activity section online. 

Kitco shows me that the CAD $ is stronger that the US right now so I'm concluding this comes into play somehow...


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## humble_pie (Jun 7, 2009)

hello cedebe, there isn't quite enuf information in your post for me to know whether everything proceeded correctly or not.
_
"bought 10,653 CAD; sold 10,704 US"_

this part seems fine. The bank of canada noon rate today (3 feb/12) was 1 cad = 1.0055 usd, so you hit it just about on the nose. Especially if the 2 amounts you recite are net of commissions for the buy & the sell ... in that case you somehow did a hair better than the BOC rate ... there is no finer gambitting that can be done !

moving on, i don't know about your 10,505.99 figure. After you sold for USD 10,704, did you then buy a US security for an amount that could generate this 10,505.99 in either usd or cad ?

what you want to see, after all has ironed itself over the next 2-3 business days, is that entire USD 10,704, less any applicable commissions, either deposited entirely into your US money market fund or else used, in whole or in part, to buy a US security. However, it is normal for the ironing to take a couple business days.

the difficulty is that many of these USD transactions will be reported in CAD & the system will be using the broker's FX rate of the day, complete with those steep broker's FX fees, to calculate those CAD amounts.

this is why it's important, when gambitting in tdw rrsp, to note down every single USD figure that shows up in the sequence of transactions, including actual USD proceeds, USD commish, USD net proceeds, etc.

how the system then mumbles these figures to itself over the next couple of days does not really matter. In the end you should wind up with the exact USD amount you have set forth above, namely, 10,704, which may in turn be subject to a commission.


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## cedebe (Feb 1, 2012)

humble_pie said:


> hello cedebe, there isn't quite enuf information in your post for me to know whether everything proceeded correctly or not.
> _
> "bought 10,653 CAD; sold 10,704 US"_
> 
> ...


Thanks for the reply, humble_pie.

I was dealing with 2 different reps yesterday and while both understood why I was buying and selling as I was, their responses were quite different as to whether I was successful or not. One said I should be up about $40, but the other thought I lost around $50 doing it my way. (The 2nd one was kind enough to refund my trading fees for the 2nd gambit as I used the same stock as the 1st one. Note to self: when gambitting, convert the total amount over in 1 transaction rather than thinking of them as 2 separate transactions for 2 separate ETF purchases. ) 

My account has a bit more info in it today, but the official settlement date is the 8th so I'll review it then. I'm determined to get this figured out for myself. I'll report back... hopefully with an answer rather than with more questions...


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## cedebe (Feb 1, 2012)

So here's the answer according to the rep I've glomped onto at TDW. (I have to say I'm quite impressed with their service. It's been almost a week since I spoke with this man and not only did he remember me, he created a spreadsheet to try to figure out whether I actually saved money by going the NG route.)

I did my gambitting in 2 transactions.

1) 200 shares of RY bought at 53.27 CAD and sold for 53.57 US. The conversion rate was 1.85%. The amount deposited in the US money market fund is showing as 10,505.99 CAD. 

2) 205 shares of RY bought at 53.18 CAD and sold for 53.54 US. The conversion rate was 2%. The amount deposited in the US money market fund is showing as 10,746.39 CAD. 

Therefore...

Sum of CAD purchases (including 2 trading fees) = 21,575 CAD.
Sum of shares x US $/share (including 2 trading fees) = 21,412.42 US.

Gambit: 21,412.42 US
TD FX: 21,362.16 US
Savings: 50.26

What I don't understand is how my TDW guy came up with the final US amount. I see the following in the money market fund:

Quantity: 1,070.401; net amount: 10,505.99 CAD
Quantity: 1,096.57; net amount: 10,746.39 CAD

If I take the total shares, 21,66.971 multiplied by the share price, 10, I get 21,669.71 US. 

So the question is why is TDW telling me I have 21,412.42 US in my money market account when I'm thinking I should have 21,669.71? What am I missing?? Is the spot price for the separate transactions coming into play somehow?


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## Fain (Oct 11, 2009)

Questtrade will rip you off with forced currency conversion. 0.8% going into a trade and 0.8% getting out. Forex trading is pretty bad there too. Interactive Brokers is more professional


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## humble_pie (Jun 7, 2009)

cedebe i'm making 2 assumptions here but i believe you should have the amount which you think you should have in US MMF. This amount is 21,669.70 if my assumptions are correct.

i'm assuming that you're paying commish at the rate of 9.99/trade & also that the entire proceeds from your 2 USD sales of roybank on ny are presently sitting in US MMF.

it looks like you have been hit with FX fees on one or both trades. You mentioned upthread that you had enrolled in automatic wash only the night before you did the trade(s). Possibly the system had not yet updated this information everywhere, so it applied the FX fees. If that is the case, the tdw representative should restore your full USD amount, ie the 21,669.70.

at this point, you could ask to refer your case to a resource person. This is a managerial level troubleshooter, usually a highly experienced former trading representative. He or she will have a good understanding of gambitting.

hint: you can help your case by focusing on the USD amounts only. You need to get the US dollar story dead straight. Put out of your mind all those CAD FX calculations; they are just the system mumbling to itself.

wishing you the very best of luck.


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## madMike (Feb 10, 2012)

*TDW Forex gambit*

Thanks for the posts and replies, especially Humble Pie - very informative. I wanted to share my experience, maybe someone can help shed some light on my situation - similar to cedebe.

I have called TDW to sign up for automatic washing about 10 days ago. I tried the gambit as follows, in my TFSA:

Feb. 7, 1:15 pm: 
BoC rate $1 CAD = $1.0046 USD
TDW rate $1 CAD = $0.9883 USD

Buy 112 shares RY-T x $53.57 = $5999.84 CAD + 9.99
immediately sell RY-N on NYSE: 112 x $53.791 USD = $6024.59 - 9.99 com - 0.12 tax

I honestly do not remember the currency converter checkbox, and whether I checked it, like one of the other posters here said. Could be important. But the idea was to convert $6000 CAD to USD, for $US purchases, from USD money market fund.
I called TDW later around 5 pm to ensure the trade washed, even though I have automatic washing. I was told yes.

Feb 8: On TDW account site: Confirmation of buy sell shows USD $6024.59-9.99 commish - 0.12 tax -117.28 (discount on US funds converted at 1.95%.

Whoa! I called TDW, spoke to a good (IMO) rep, was told trade should settle next day (meaning this day, the 8th) and show in my account later that afternoon, and I will get $6024.48 USD (minus commish and tax) in money market fund, and he even did calculations and knew exactly what I was doing (after putting me on hold and speaking to floor rep).

So it's Friday the 10th, I look at the posts on here and it seems that others have gone through the exact same scenario.
Does I have to specifically buy the TDB911 USD money market, does it go automatically to this when you wash trade, and does it take 3 days + for your USD to show in your account?

Otherwise I just traded $5999.84 CAD for $5897.20 CAD with nothing to show for it except the pleasure of reading all of your posts on here!


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## humble_pie (Jun 7, 2009)

mike i think you're going to be fine. You will probably have to wait until at least monday, possibly tuesday, for all transactions to update in your account.

as i mentioned to someone else here in this thread, please concentrate on getting - and keeping - the US dollar story dead straight. Pay no attention to the frequent conversions into CAD that you'll see in the account. These are just the system mumbling to itself. System will constantly try to default back into canadian dollars.

system is not ever going to show you the total number of US dollars that you do actually possess in money market. What it will show you, in a left hand column, is the total number of units you possess in US MMF. Multiply no. of units by $10 & you'll have your number of US dollars.

it's necessary to keep 2 accounting systems in mind. One, fully documented, is the canadian dollar account. The other, seen only in glimpses, are the shadowy US dollar holdings. But there enough sightings to keep all the facts straight.

think of it this way. The big green is getting clients in shape for pair trading. Contingency trading. Hedging. Anything that requires parallel & actively moving sequences of numbers 

seriously, all joking aside, td waterhouse is not doing this to be difficult or mean or cheap. They're doing it because the top-notch mainframe system which they lease from IBM - a system used by half the brokers in canada - doesn't permit a US dollar rrsp to be built upon it. This is a fact of life, just like a person is born a certain height or with certain colour eyes.

tdw is foremost among all the other brokers using ISM - the list includes scotia itrade, cibc & hsbc, including their full-service divisions - tdw is foremost among these brokers in inventing workarounds to help customers retain their US dollars without conversion in rrsp. The other brokers either do nothing or else charge for the same washing services that the big green carries out for free.


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## cedebe (Feb 1, 2012)

humble_pie said:


> cedebe i'm making 2 assumptions here but i believe you should have the amount which you think you should have in US MMF. This amount is 21,669.70 if my assumptions are correct.
> 
> i'm assuming that you're paying commish at the rate of 9.99/trade & also that the entire proceeds from your 2 USD sales of roybank on ny are presently sitting in US MMF.
> 
> ...


Well, it all worked out in the end. I spoke to 2 different people at TDW on Friday who assured me that the final US amount is indeed 21,669. One suggested that the spreadsheet guy did his calculations before the last bit of the trade settled or the before the wash was recognized by the system.

I had asked about the conversion rate that I saw on my statement: "CONV TO CAD @1.85 %US DIS." Someone on another board explained that this most likely makes sense and that the gambit did work, but without knowing what the spot rate was at the time of the trades, I won't be able to find out how much I saved exactly.


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## humble_pie (Jun 7, 2009)

cedebe i do feel you are kind of agonizing over nothing. Who cares about the spot rate. The arbs already gave you the spot rate when you bought in toronto & immediately sold on new york. That's what gambitting is about. It's riding on the coattails of the arbs. Please be assured, if you gambit correctly you will get the arbed spot rate or close to it.

if you want to finickity force this pair trade to its extreme bitter end you'd have to find out what tdwaterhouse would have charged you to exchange the dollars ie find out what you would have paid on that day to buy 21,669.70 US dollars at the big green. This amount would include both the spot exchange rate plus the broker's famous FX fee, which alone is roughly something like 1.50%. Then you'd compare that figure with the number of canadian dollars you actually used to acquire your USD 21,669.70.

sorry if i sound annoyed. But you're having more than average difficulty understanding what is going on. I've already mentioned that the tdw rrsp client has to get the US dollar story dead straight. From now on, the tdw rrsp client with US holdings is going to have to keep the US dollar story dead straight.

some people are ok with parallel but separate number sequences. Some people are not. It's possible that gambitting is not for you, or possibly holding US securities in tdw rrsp is not for you.


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## cedebe (Feb 1, 2012)

humble_pie said:


> cedebe i do feel you are kind of agonizing over nothing. Who cares about the spot rate. The arbs already gave you the spot rate when you bought in toronto & immediately sold on new york. That's what gambitting is about. It's riding on the coattails of the arbs. Please be assured, if you gambit correctly you will get the arbed spot rate or close to it.
> 
> if you want to finickity force this pair trade to its extreme bitter end you'd have to find out what tdwaterhouse would have charged you to exchange the dollars ie find out what you would have paid on that day to buy 21,669.70 US dollars at the big green. This amount would include both the spot exchange rate plus the broker's famous FX fee, which alone is roughly something like 1.50%. Then you'd compare that figure with the number of canadian dollars you actually used to acquire your USD 21,669.70.
> 
> ...


While I'm sure you didn't intend it as such, I find your reply rude and uncalled for. 

I'm well aware of the 'general' concept of gambitting; I'm merely trying to get to the specifics so I can fully understand the info in my account and find out how much I actually saved. Shame on me for striving to be an informed investor...


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## humble_pie (Jun 7, 2009)

if anyone is making rude remarks, i believe it is yourself.

my time is worth several hundred dollars an hour. That's what i take in from activity in financial markets. I've spent easily an hour or more trying to help you, although your messages are exceptionally confused.

you par contre have obviously bothered the bejesus out of the td representatives. They are not going to want to keep on holding your hand & walking you repeatedly through the very same steps, over & over & over again. No, people don't usually call their brokers 3 times about the same transaction.

i'm an expert gambitter & i don't believe you are catching on fast enough or well enough.


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## cedebe (Feb 1, 2012)

humble_pie said:


> if anyone is making rude remarks, i believe it is yourself.
> 
> my time is worth several hundred dollars an hour. That's what i take in from activity in financial markets. I've spent easily an hour or more trying to help you, although your messages are exceptionally confused.
> 
> ...


LOL! I reckon we're done here...


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## madMike (Feb 10, 2012)

*US$ Conversion gambit*

Just a quick note to Humble Pie...thanks, and thanks to Avrex also for the initial posts. I checked my TDW today and it appears that it takes those 3 days to show a settled trade in the $US money market fund.

So the Norbert's Gambit in TDW will work in TFSAs. A curious detail (to me) of the way the funds are displayed has the $US Money Market showing Book Value in $CAD ($5897.20) as if it was converted at TD's rate; but Market Value shows my $US at $6030, the desired outcome - ($US MM units x $10).

Like Humble posted, you have to ignore the quirks of the system trying to show you $CAD. 
This is very useful to know for people who want to exchange CAD for US $ in TFSAs as well as RSPs.


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## humble_pie (Jun 7, 2009)

mike a tiny adjustment to your message if i may.

_" A curious detail (to me) of the way the funds are displayed has the $US Money Market showing Book Value in $CAD ($5897.20) as if it was converted at TD's rate; but Market Value shows my $US at $6030, the desired outcome - ($US MM units x $10)."_

actually both the book value column & the market value column are showing CAD, converted at the rate of the pertinent date. Book will be date of purchase, market will be previous business day.

the reason you're seeing market value in what appear to be US dollars is because the 2 currencies are so close to par right now. If the currencies were far apart, you'd see more clearlly that market value column is CAD.

basically the only accurate way you're going to be able to "read" your inventory of US dollars is to take the total number of US MMF units (left column) & multiply by $10.


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