# Need clarification regarding a recent DLR/DLR.U conversion



## larry81 (Nov 22, 2010)

Hi folks,

I have a question regarding a recent conversion i did with the DLR/DLR.u combo (this is done in a non-reg account)

1. I got a quote on DLR. I confirmed that the bid-ask spread was 2 cents and put a limit order for the following:

29-Apr-2013	BUY	9891 [email protected] -9.99 Commission = 99988.02 CAD

2. Waited for the trade to settle (T+3 days) and called TDWH to journal DLR to my US investment account.

3. Waited another 2 business days for the shares to get journaled over. Tonight the DLR position was transferred to my USD account.

While I was waiting for the settlement/journaling, the USD-CAD exchange rate moved by about 0.5%

If tomorrow I sell my holding at DLR.U current bid price I would get:

7-May-2013	SELL	9891	[email protected] –9.99 Commission = 98603.28 USD



Corresponding to about 98.6% of my original CAD amount, which seem excessive ? Is there anything i don't understand here???

edit: using Bank of Canada currency converter with the end-of-the-day rate of 29-Apr-2013 give me 98,638.78 USD.

edit2: moral of the story, exchange rate fluctuate


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## GoldStone (Mar 6, 2011)

DLR.U price is constant. DLR price fluctuates to reflect the current exchange rate. You fix your exchange rate the moment you buy DLR (not the moment you sell DLR.U).

You have to cross the spreads to buy and sell. The spreads explain the difference between your effective rate and BoC rate.


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## none (Jan 15, 2013)

If you have autowash set up at TDW all you need to do is wait for the trade to fill then you can sell. No need to wait for the trade to settle. Once you sell the DLR.U you can even start buying US securities immediately. Therefore, you can for from having a hoser bucks to buying US funds within a couple minutes (depending on how fast you type).
_
edit: just noticed this is done in a on-reg account. I'm not sure how that changes thing._


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## Spudd (Oct 11, 2011)

None, in a non-reg account there's no such thing as auto-wash. There are separate Canadian and US accounts and you have to wait for the journal (3 business days). I haven't tried it myself but that's the understanding I have from reading threads.


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## larry81 (Nov 22, 2010)

Sold this morning


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## andrewf (Mar 1, 2010)

When I did a few conversions using DLR a couple months ago, I calculated my slippage to be about 30 bps (0.30%) vs the exchange rate on the day I bought DLR after all spreads and commissions. I think that's acceptable as a one-time cost.


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## Squash500 (May 16, 2009)

This is a great article on CC's website that explains exactly what Larry did. http://www.canadiancapitalist.com/a-foolproof-method-to-convert-canadian-dollars-into-us-dollars/

I'm realizing that Google is my friend--LOL.


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## Squash500 (May 16, 2009)

This is another helpful article for investors with TDW accounts like myself. Again from CC's excellent website.

http://www.canadiancapitalist.com/instant-norbert-gambit-for-all-td-waterhouse-investment-accounts/


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## CanadianCapitalist (Mar 31, 2009)

Thanks for the plug. I should point out that the instant NG at TDW post was courtesy of a CMF member. 

Also, for a large amount such as this, I would have done an instant gambit because DLR/DLR.U spread is 20 bps. With an inter-listed stock like TD, the spread could be as low as 2 bps. One would pay the fee for a phone order and still save about $100 or so on a $100,000 transaction.


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## Squash500 (May 16, 2009)

CanadianCapitalist said:


> Thanks for the plug. I should point out that the instant NG at TDW post was courtesy of a CMF member.
> 
> Also, for a large amount such as this, I would have done an instant gambit because DLR/DLR.U spread is 20 bps. With an inter-listed stock like TD, the spread could be as low as 2 bps. One would pay the fee for a phone order and still save about $100 or so on a $100,000 transaction.


 Thanks for the additional information CC. I really enjoy reading your excellent website.


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## larry81 (Nov 22, 2010)

CanadianCapitalist said:


> Thanks for the plug. I should point out that the instant NG at TDW post was courtesy of a CMF member.
> 
> Also, for a large amount such as this, I would have done an instant gambit because DLR/DLR.U spread is 20 bps. With an inter-listed stock like TD, the spread could be as low as 2 bps. One would pay the fee for a phone order and still save about $100 or so on a $100,000 transaction.


Thats what i will do with my next conversion. Would be great if you make a summary post of the steps involved for instant gambit


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## humble_pie (Jun 7, 2009)

larry81 said:


> Thats what i will do with my next conversion. Would be great if you make a summary post of the steps involved for instant gambit



larry as CC says, don't fool around in the DLRs w 100k for 5 days. Here's a detailed post from CC blogspot:

http://www.canadiancapitalist.com/instant-norbert-gambit-for-all-td-waterhouse-investment-accounts/ 

these tips are for non-registered instant gambits at tdw.

more hints:

- don't do odd lots, speed is of the essence;

- organize everything including prep the online buy order but don't send it until you've got your live tdw rep set up on the phone;

- td bank is a good interlisted carrier if you are paying agent-handled commish to sell (u need an expensive stock so there will be fewer shares) but in your case you might as well ask for the web commish on the sell side imho.


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## larry81 (Nov 22, 2010)

Thanks for the great infos CanadianCapitalist & humble_pie !

If i understand, the process for instant-gambit in non-reg account is the following:

1. Prepare buy order on TD at current ASK price
2. Call TDWH hotline and tell them what i want to do
3. Verify ASK price and place the buy order
4. TDWH rep will sell at current BID price and journal the position instantly
5. Voila !

I will be charged 49$ for the sell order. How come you mention that i should ask for the web commish on the sellside humble_pie, because of the amount involved ?


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## humble_pie (Jun 7, 2009)

larry how do you calculate $49 for the sell commish? 

the way i see it for 1300 TD is buy at online commish which is 9.99.

but the agent-handled sell commish will officially be ($39 + .08/sh) which is $143. Total for the pair of transactions would then be roughly $153. This is still far less than broker might charge as FX fee on 100k.


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## larry81 (Nov 22, 2010)

Folks, i tried to do a quite large DLR/DLR.U conversion today. Was on phone with the rep, everything was explained and understood on both side. However, when i placed the initial BUY order at the current ASK, i received the following message:



> Your order quantity is greater than the quantity that is currently offered for sale. Your order may be subject to price volatility


The agent told me there was about 2500 share available at the current ASK price. From what i remember volume should not be an issue with DLR/DLR.U since arbitrager are supposed to manage supply and demand but got i got scared and canceled the operation.

Also contemplated using TD as an interlisted stock but market are down today i prefered to abort.

Anyone can explain ? What if i had placed my order at current ASK ? I want to avoid partial fill as you can assume...

edit: holy %"/!"?$"! i just realised that the agent commish is not 39$ flat but 39$ + .08/share, i was about to get dinged of 1k+, completly defeating the purpose of DLR/DLR.U !!!


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## blin10 (Jun 27, 2011)

just buy/sell RY or TD on both sides and stop with this DLR bs, i don't know why this DLR is popular


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## larry81 (Nov 22, 2010)

blin10 said:


> just buy/sell RY or TD on both sides and stop with this DLR bs, i don't know why this DLR is popular


I think you are right, DLR/DLR.U are not worth the hassle for me


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## CanadianCapitalist (Mar 31, 2009)

Buy DLR sell DLR.U gambits are worthwhile at TD Waterhouse taxable investment accounts because it is cheaper to do so compared to traditional gambits with interlisted stocks assuming you are ok with the 1 week it takes.

Example:
Buy $5,000 worth of DLR. Sell DLR.U. Total cost = $30 (2 commissions plus 2 cents per share of DLR).
Buy $5,000 worth of TD. Phone, journal and sell TD in the US. Total cost = $53. (1 Webbroker commission plus 1 phone commission plus 1 cent per share of TD).

If I were exchanging $100K, I would do the instant gambit with interlisted stocks.
Buy $100K worth of DLR. Sell DLR.U. Total cost = $220 (2 commissions plus 2 cents per share of DLR).
Buy $100K worth of TD. Phone, journal and sell TD in the US. Total cost = $139.


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## larry81 (Nov 22, 2010)

Thanks for the info CC but i am wondering where do you get your info for the phone commission, all i see is:

http://www.tdwaterhouse.ca/products...ommissions-fees/index.jsp#telephone-brokerage

For example, 100k with TD:

Buy = online commission 9.99$
Sell = phone commission 35$ + 0.06$/share

Lets assume maket value of 96$ for TD. 100k get 1040 shares, for a total commission of 62.4$ + 35$ for the phone sell.


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## blin10 (Jun 27, 2011)

where are you guys pulling these fees from, if you got 50k+ in the account it's 9.95$x 2, so around $20 to buy/sell.... not to mention if you are with royal bank you don't need to phone anyone, it's all done automatically


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## CanadianCapitalist (Mar 31, 2009)

You are selling on the US side where the phone commission is $39 plus 8 cents / share. The bid-ask spread on TD is 2 cents/share on the US side and 1 cent/share on the CAD side. Average is 1.5 cents/share.

When you buy 1040 shares of TD your cost is $10
When you sell 1040 shares of TD on the US side your cost is $39 + 1040 * .08 + 1040 * .015 = $137.80

Yes, with Royal Direct and BMO InvestorLine, you can gambit with TD stock for the price of two online commissions. With TD Waterhouse, you cannot execute gambits online without phone intervention in taxable investment accounts. Therefore, the cost is higher.


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## larry81 (Nov 22, 2010)

Since there manual journaling of the share over the USD account, the SELL order need to be placed by a phone agent, the phone commission apply


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## blin10 (Jun 27, 2011)

wow that sucks, switch to RY :>


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