# No Currency Conversion Fee at Virtual Broker?



## johnanderson (Feb 12, 2016)

Hello,

I contacted Virtual Brokers to know about their currency conversion fees because I am thinking of buying a US-ETF from a CAN denominated TFSA (I don't have a US TFSA). I wanted to know how much this would cost me in conversion. They said there was no conversion. I just can't believe this. There is surely hidden costs at buying US Etfs or equities from within a Canadian account, right? Can you guys help me to point out what I'm missing here? Thanks!



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Me:
What is your currency conversion fees?

VB Support 2:9:53 AM
There is no fee when you do a currency conversion within your VB accounts.

Me:
There is probably a fee or a commission factored in the currency conversion rate then, right?

VB Support 2:9:55 AM
We do not charge a fee when you perform a currency conversion between CAD-USD within your VB accounts.
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## gardner (Feb 13, 2014)

There is undoubtedly a buy/sell spread on the currency conversion. I don't know anything about VB in particular, but based on their low-fee approach, it may be that a small spread like 50bps is all there is. Maybe try asking them to quote you a rate and compare that to the spot rate. You can watch the spot rate here -- times are GMT I believe.

http://finance.yahoo.com/echarts?s=USDCAD=X&t=5d&l=on&z=m&q=l&c=#{%22range%22:%221d%22,%22allowChartStacking%22:true}


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## humble_pie (Jun 7, 2009)

i'm also one who believes that there will be a FX fee charged by the broker. After all, their own bank is charging them an FX fee, why would they not pass this along to the client.

i'm also mindful that many front-line licensed reps at the broker call centres (your *chat* correspondent may not even hold a broker/dealer license) alas know very little about quite a few areas. It's possible that VB chat friend may be getting his notion from the fact that an FX fee is not separately & clearly set forth on each conversion transaction (there are not yet any regulations that require this, so many broker FX fees remain hidden.)

perhaps you could approach Virtual from another perspective. Ask them what their rate is to buy USD, meaning buying USD from CAD. In the same conversation, ask what is their rate to buy CAD, meaning buying CAD from USD.

the difference will be their spread rate.


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## mf4361 (Apr 11, 2015)

VB charges 75 bp of spread for currency exchange.

https://www.virtualbrokers.com/en-us/faq

Under Fees

What is the spread for currency conversions?

For foreign exchange transactions, Virtual Brokers acts as principal with you, and may earn revenue on the spread (50 - 185 bps). On forced currency conversions (happens when you trade a U.S. stock in a CDN registered account), spread of 75 bps will be applied. Please note that to avoid forced currency conversions, Virtual Brokers offers USD denominated registered accounts at $15 per quarter.


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## johnanderson (Feb 12, 2016)

Thanks Gardner.

When I asked VB their conversion rate this morning, they quoted me Bloomberg (see below). 

I must admit that I don't how that 185 basis points relate to the currency rate. Does it have to do with the spread?


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Me:
Ok
What is the conversion rate US-CAN as of now?

VB Support 2:9:56 AM
Today's Bloomberg closing rate at 4pm 185 basis points

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## johnanderson (Feb 12, 2016)

OK. It's getting clearer. 

I now understand that VB will charge 75bps when I trade a U.S. stock in a CDN registered account.

In what cases, however, will VB take the 50-185bps spread? Would this applies only when someone transfer money in a US account from a CAN account (and vice-versa)?




mf4361 said:


> For foreign exchange transactions, Virtual Brokers acts as principal with you, and may earn revenue on the spread (50 - 185 bps). On forced currency conversions (happens when you trade a U.S. stock in a CDN registered account), spread of 75 bps will be applied. Please note that to avoid forced currency conversions, Virtual Brokers offers USD denominated registered accounts at $15 per quarter.


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## humble_pie (Jun 7, 2009)

mf4361 said:


> For foreign exchange transactions, Virtual Brokers acts as principal with you, and may earn revenue on the spread (50 - 185 bps). On forced currency conversions (happens when you trade a U.S. stock in a CDN registered account), spread of 75 bps will be applied. *Please note that to avoid forced currency conversions, Virtual Brokers offers USD denominated registered accounts at $15 per quarter*.



imho the IIROC should stop those fees that are still being charged by a dwindling number of brokers, to prevent FX fees in monocurrency registered accounts.

most brokers have cured this problem, either by creating true dual-currency registered accounts or else by patching their monocurrency systems to deliver USD dividends converted to CAD at favourable spot rates.

i would not pay such a fee. I'd move the registered account to another broker pronto. There are plenty of brokers these days with favourable FX accommodations for registered accounts, it's outrageous that yesteryear's accounts that still charge $$ to prevent FX fees continue to blight the landscape .each:


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## gardner (Feb 13, 2014)

mf4361 said:


> spread of 75 bps


They seem to be quoting this as a per-direction. I am not 100% clear, but I think that would make a round-trip come out at ~1.5% -- put in CAN$100.00 and round-trip it through US$ and you'd wind up with $98.50. (with a half cent somewhere)


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## mf4361 (Apr 11, 2015)

I believe you can exchange CAD cash to USD cash in VB. That's where 50 - 185 bps applies.


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## Trizi (Mar 27, 2017)

*Virtual Brokers Currency Conversion with example*



johnanderson said:


> Hello,
> 
> Ok so I just had a long chat with VB support using an example.
> USD $10K convert to CAD..
> ...


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