# Norbert Gambit within iTrade RSP?



## Chris Boar (Mar 25, 2011)

Has anyone done the gambit within an iTrade RSP account.

I'm looking to buy around $100k worth of various Vanguard ETF's and would really like to avoid getting screwed $1500 on the Forex fees.


----------



## avrex (Nov 14, 2010)

*Scotia iTrade non-registered gambit*

We'll wait for another forum member to post about the Scotia iTrade *RRSP *experience.

In the meantime, I'll post about my Scotia iTrade *non-registered* experience.
Log on to Scotia iTrade. 
*1) Buy 800 shares BMO-T.* approx $50,000.

*2) Journal shares*
You can do this yourself. No need to call in.
Select Accounts -> Account Services
Select the Securities <tab>
Select "Transfer Securities Between Scotia iTRADE Accounts" 
In my case, I filled in the form to move 800 BMO shares from my CAD to USD account.

*3) Wait for Settlement Date*
Here's the annoying part. I had to wait three business days.
I called a customer service rep. He stated that my first transaction had to reach the settlement date before the journalling would be complete.
In my case, I was lucky. The combination of the BMO stock price and the value of CAD/USD had appreciated in my favour over the three days.

*4) Sell 800 shares BMO-N*


*Conclusion - Money saved* 
I've successfully completed Norten's gambit and have accomplished my goal of obtaining US$ at close to the 'spot rate' with just the cost of two 9.99 commissions. That is much better than the approx. 1.50 % vigorish that would be charged with the standard bank currency conversion rate.

Even with the 3 day wait, and the risk of price movement of the stock and CAD/USD, I believe the gambit is well worth the savings.

Approx savings in this example, $800. (excluding the positive three day price movement of the stock and CAD/USD).


----------



## humble_pie (Jun 7, 2009)

no, this is absolutely not the way to gambit in non-registered.

this story is telling us that scotia itrade is built on the ISM system. Therefore gambit journals have to be done manually. Plus the brokers don't want to encourage or foster gambitting, they'd rather have the FX fees. So there are all kinds of resistances being put up, like the intolerable 3-day delay in avrex's post.

i've said it before. I'll say it again. Parties who intend to gambit regularly in non-registered need to find a broker whose trading platform is built upon the ADP system.

i'll say it again. The ADP system.

this system will seamlessly take both the buy & sell orders online. Will fetch, carry & deliver the correct currency & the correct stock in the correct places. No need to phone anybody.

again. The ADP system.

now back to the ISM brokers like itrade & tdw. There are undoubtedly other onliners using ISM. Of course, they can gambit instantly in non-registered, but the client needs to find a representative who is willing to do the special journal order. I've written about this before. Finding such a representative is a very iffy challenge. There are horror stories posted in the net about parties starting a gambit, only to phone the ISM broker & have the rep refuse.

again. Want to gambit regularly ? Go to ADP.

the alternative on ISM is far more difficult. Arbitrageurs, if you think about it, gambit incessantly. It's their livelihood. Arbs don't wait 3 days lol.

(signed)
ambidextrous piecrust


----------



## iherald (Apr 18, 2009)

Can you use this strategy and then transfer the US money to a US bank account? I'm thinking of buying a place in the US, if I could transfer the US money from Waterhouse to a TD us bank, I would be in great shape!

Has anyone done this?


----------



## Sampson (Apr 3, 2009)

humble_pie said:


> again. The ADP system.


sorry for the laziness to do a search Pie, but can you list the discount brokers using ADP vs. ISM systems?

For whatever reason, most of the posts about the Gambit have been from people using TDW.


----------



## humble_pie (Jun 7, 2009)

there's no such list. Everything is a work in progress. Ummm, would you have an item of info to contribute ?

the only 2 brokers i'm aware of whose mainframes utilize ADP are bmo & roy bank. We also know that tdw & itrade are ISM. Everybody else is an open book.

i'd like to say, if i may, that i've traded extensively w onliners using both systems & imho the ISM is noticeably more stable & less prone to glitches & breakdowns. It is an older system, but it's a proven workhorse.

the big green is said to be currently building its own mainframe system & will replace ISM in time. No one has a clue, of course, how this will handle arb/gambit trades, or even when it might debut.

upon reflection, it's becoming my hope that the gambitting movement will send a pleasant and clear message to the online big nobs. A message that goes: Please. Give. Us. Cheaper. FX. Rates. Now. Because. We. Are. Numerous.


----------



## Sampson (Apr 3, 2009)

humble_pie said:


> Ummm, would you have an item of info to contribute ?


Unfortunately no. I'm using RBC, and TDW, but don't really know or understand the differences among the systems. More research to come.



humble_pie said:


> it's becoming my hope that the gambitting movement will send a pleasant and clear message to the online big nobs. A message that goes: Please. Give. Us. Cheaper. FX. Rates. Now. Because. We. Are. Numerous.


My guess is their response would be to eliminate the possibility to gambit altogether. But then again, presumably competition forced the big 5 to lower transaction costs, so you never know.


----------



## Chris Boar (Mar 25, 2011)

humble_pie said:


> again. Want to gambit regularly ? Go to ADP.


So the alternative with Itrade is to open their U.S friendly RSP? 

I have no choice but to use Itrade, long story short I'm transferring UK pension funds and the Itrade RSP is about the only Canadian brokerage unlocked RSP that is UK government has approved to transfer my funds into. The alternative is various Canadian mutual funds...which I ain't doing.

Trying to work out whether the annual $120 fee + reduced FOREX charge for the U.S RSP is worth it for around a $100K transfer?


----------



## HaroldCrump (Jun 10, 2009)

Chris Boar said:


> So the alternative with Itrade is to open their U.S friendly RSP?
> 
> Trying to work out whether the annual $120 fee + reduced FOREX charge for the U.S RSP is worth it for around a $100K transfer?


No...the Scotia iTrade "US Friendly RRSP" is not a USD denominated RRSP account.
It is easy to get taken in by the advertising, until you read the fine print.
It is just a fancy smanzy marketing term and gimmick.
It gives you nothing more than the capability to wash USD trades occuring on the same date.
And they charge $120 a year for that "convenience".

As far as I know, only Questrade and RBCDI offer a USD denominated RRSP account.


----------



## Four Pillars (Apr 5, 2009)

Chris Boar said:


> So the alternative with Itrade is to open their U.S friendly RSP?
> 
> I have no choice but to use Itrade, long story short I'm transferring UK pension funds and the Itrade RSP is about the only Canadian brokerage unlocked RSP that is UK government has approved to transfer my funds into. The alternative is various Canadian mutual funds...which I ain't doing.
> 
> Trying to work out whether the annual $120 fee + reduced FOREX charge for the U.S RSP is worth it for around a $100K transfer?


Harold is right - it's not a separate account.

The charge is actually $30/quarter, so you should be able to sign up for it - do the transfer and any exchanging you need to do, and then cancel it.

Here are some more thoughts about it, which aren't really relevant if you don't have any other options:

http://www.moneysmartsblog.com/scotia-itrade-us-friendly-rrsp-currency-exchange/


----------



## Four Pillars (Apr 5, 2009)

HaroldCrump said:


> No...the Scotia iTrade "US Friendly RRSP" is not a USD denominated RRSP account.
> It is easy to get taken in by the advertising, until you read the fine print.
> It is just a fancy smanzy marketing term and gimmick.
> It gives you nothing more than the capability to wash USD trades occuring on the same date.
> ...


Qtrade offers it as well. The only difference with Qtrade is that it is an entirely separate account and subject to another $50/year account fee, unless you have enough dough to get it waived.


----------



## humble_pie (Jun 7, 2009)

chris i went back to your original message & noted you are planning to convert within your rrsp at itrade ...

assuming this will all run similarly to tdw, since the mainframe systems are the same. At td, the trading platforms for registered & non-registered accounts are different. A td registered account will accept online gambit orders like a little lamb. Buy. Sell.

(it's the non-registered accounts at tdw - & apparently also at itrade - that trigger gambit problems.)

i've never had an itrade account, cannot say if itrade rrsps can gambit perfectly. But if they do, then you would be alright within your itrade rrsp i believe.

would you mind if i inquired why you are hastening to convert these pension funds into USD. Won't there be a double conversion, from pounds into CAD & thence onwards into USD. Would it not make more sense to just get the funds from the UK into a CAD rrsp & then make plans in a more leisurely fashion to migrate the account onwards to a house that would favour US rrsp holdings, etc ...

i believe harold is right about that high $120 fee for not much of a US rrsp account at itrade. Other brokers like tdw & bmo routinely wash rrsp trades in USD without any fee whatsoever. So i find myself wondering, if you are gambitting your currency yourself, for what would you be paying the $120 (?) The sole benefit i can see would be if dividends from US investments got paid in USD & such dividends were not themselves subject to FX fees.


----------



## Chris Boar (Mar 25, 2011)

humble_pie said:


> would you mind if i inquired why you are hastening to convert these pension funds into USD. Won't there be a double conversion, from pounds into CAD & thence onwards into USD. Would it not make more sense to just get the funds from the UK into a CAD rrsp & then make plans in a more leisurely fashion to migrate the account onwards to a house that would favour US rrsp holdings, etc ...


Yep that's another option. Just trying to keep my MER down, and would rather do it all in one go. I'm going to suffer a double conversion either way, it's just whether I do it in one hit, or 'spread the pain' as you suggest.

Also I know the iTrade U.S. account is actually a CAD$ account, but my understanding is they reduce the FOREX hit to about .5% instead of the usual 1.5% ?? Could I do the transfer and then move the funds to the iTrade normal 'Cad$' RSP and shut the U.S. RSP?


----------



## HaroldCrump (Jun 10, 2009)

humble_pie said:


> The sole benefit i can see would be if dividends from US investments got paid in USD & such dividends were not themselves subject to FX fees.


I doubt that is the case since it's after all a CAD denominated account.
My guess is that US dividends will get slammed with the forex conversion spread.
But I'll call tomorrow to confirm that.


----------



## HaroldCrump (Jun 10, 2009)

HaroldCrump said:


> I doubt that is the case since it's after all a CAD denominated account.
> My guess is that US dividends will get slammed with the forex conversion spread.
> But I'll call tomorrow to confirm that.


I spoke with iTrade.
They confirmed that the preferred exchange rate only applies to trades and not distributions.
Dividends, interest, etc. will continue to be subject to the normal forex conversion rates.
In the case of iTrade that rate is 1.95%

I also took this opportunity to ask if/when they plan to offer a true USD registered account and unfortunately, this is not a priority for them at this time.
They are focused on a website upgrade later this year and consolidation of the Trade Freedom platform into iTrade.


----------



## dcaron (Jul 23, 2009)

I really cant wait until all of our big banks get with the program, and start offering USD accounts, which will be dividend friendly as well ...

Is it so much to ask to have the convenience of having all my regular banking and brokerage accounts under one roof, and not get hit with endless fees? Maybe it makes more sense to deal with four different FI's for my mortgage, HELOC, registered investments, un-registered investments, etc. ;-)


----------

