# Recent Norbert's Gambit experience at TD DI



## vdimitrov (Dec 1, 2014)

I have just performed Norbert's Gambit in a RRSP account at TD DI and wanted to share the somehow negative experience.
Initially, I was planning to buy an interlisted stock (TSX:CM) in the CAD account and then phone TD DI to journal the shares and sell in the USD account on the NYSE:CM and deposit the USD proceeds in the account.

While I was ready to execute online the buy order in the CAD account, I phoned TD DI and was planning to ask for a web based commision on the sale transaction, due to this being deficiency in TD's trading platform. After 15 min waiting to connect, the first broker told me that he is familiar with the Norbert's Gambit, but TD does not allow this in registered accounts. I have started arguing that I have done this 4-5 times in the past and that I am confident they support it. The guy was very confident and told me that he was trader since 2013 and that TD has never allowed NG in registered accounts. Then he put me on hold to confirm with the back office and in few minutes got a confirmation and put a note that the customer tried NG in the RRSP account which is not allowed. I asked him will it work if I purchase instead DLR.TO then call TD DI to journal the shares on the USD account, then wait for the settlement and journal request to complete (T+3+1) and finally sell DLR.U in the USD account. The guy confirmed that this will work and that I am essentially locking in the exchange rate the moment I buy DLR, which I have already knew. I thanked him and hanged up.

I placed the DLR.TO order online myself and once the order was filled decided to call TD DI again to tell them to submit a journal request for the DLR shares. After another 15 min wait time, the second broker told me that he can submit the journal request and that usually takes 1 to 2 business days for the shares to arrive on the USD side. Then he asked me if I want him to sell the shares righ away on the USD side, which left me dumbfounded. I asked him if he is sure that this will work and that I have just been told and confirmed with the back office that this is not allowed in registered accounts. He was surprised but saw the note left by the first broker and said that he needs to check with his trade manager. After 10 min I was told that Norbert's Gambit in registered accounts is supported by TD. I asked him to explain why TD provides an inconsistent message to the customers and he told me that the previous broker was not entirely wrong and that there was an old document from 2012 stating that NG was not supported in registered accounts, but this document is no longer valid since TD introduced the USD accounts. I told him that I was able to perform NG online myself before TD introduced the USD accounts. Then we argued a bit about the commision, but I was told starting Sep 2016 TD instructed all brokers to charge phone based commision (min 43$) for the sell order of the gambit. The broker proceeded with journalling the DLR shares on the USD account and selling the DLR.U on TSX but in the USD account. It cost me a full brokerage commision of 43$. The overal gambit cost for the currency exchange was 1%. At the same time the TD exchange rate was 1.5%, so I saved a bit, but wasted close to two hours. It may not be woth it to perform this if the amount to exchange is less that $5000.

I provided a detail feedback to the second broker and explained that the Norbert's Gambit is available at both RBC and BMO online, without need of calling and for the cost of two web based commisions. He said that my feedback will be forwarded to his manager, so let's hope TD will change their policies soon if they want to stay competative.


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## james4beach (Nov 15, 2012)

Ouch. Thanks for sharing this. I use TDDI but never tried a gambit inside the RRSP.

What I've figured out though is that TDDI is one of the worst brokerages for gambits. It's unfortunate because I'm happy with everything else about them.


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## gardner (Feb 13, 2014)

vdimitrov said:


> let's hope TD will change their policies soon


Don't hold your breath. "soon" has been at least 4 years for me.


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## TomB19 (Sep 24, 2015)

I moved a decent chunk of cash with NG in an RRSP, just before Christmas.

When I called and asked him to journal DLR shares to the US side of my RRSP account, he said, "Oh. Norbert's Gambit. Let me take care of that for you." From there, he recommended that I sell the DLR.U myself, to save commission.

It was effortless.

It's clear there is a strong element of service roulette in play.

I have also wondered how much the size of the account factors in. I tend to get smiles and cooperation, any time I present myself to TD, but it was not always like this. When I was a little fish, it was far more difficult to get their attention. This shouldn't be the case. Perhaps I am misperceiving it.


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## vdimitrov (Dec 1, 2014)

gardner said:


> Don't hold your breath. "soon" has been at least 4 years for me.


I have sent my negative feedback to one of my contacts at TD DI and he will escalate with his manager and will follow up with the trading floor. I have posted my experience in two popular financial forums and there have been over 1000 combined views since yesterday. I think that TD will start listening when more people complain and start moving their accounts to more gambit friendly brokerages.


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## vdimitrov (Dec 1, 2014)

TomB19 said:


> I moved a decent chunk of cash with NG in an RRSP, just before Christmas.
> 
> When I called and asked him to journal DLR shares to the US side of my RRSP account, he said, "Oh. Norbert's Gambit. Let me take care of that for you." From there, he recommended that I sell the DLR.U myself, to save commission.
> 
> ...


You were very lucky! I was told by both TD brokers, that in order to sell the shares myself on the US side of the RRSP account, I had to wait T+3 days for the shares to settle and wait for the journal request. In regards to the size of the accounts, mine is not a small one, but I believe most personal RRSP accounts will be insignificant in the eye of the big bank. However TD must realize that they inconvenience a lot of people. I don't think that they were fully aware of this fact and when I told the second broker that both RBC and BMO brokerage offer online NG without the need to call, he was surprised and promised to provide my feedback and information to his manager.


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## TomB19 (Sep 24, 2015)

Vdimetrov, I did not intend to post my experience to devalue yours. I just thought more information would be helpful.

I also had to wait for three days for the shares to show up on the us side of my account, before I could sell them.


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## vdimitrov (Dec 1, 2014)

TomB19 said:


> Vdimetrov, I did not intend to post my experience to devalue yours. I just thought more information would be helpful.
> 
> I also had to wait for three days for the shares to show up on the us side of my account, before I could sell them.


Tom, I appreciate your post. I am glad you clarified that you had to wait for three days, as my impression from your first post was that you were able to sell DLR.U right away. For me it was not acceptable to wait, so I had to pay the 43$ commission. I know that you are locked in the exchange rate when you buy DLR, but a lot can happen in three days on the market and the US listed ETFs I was planning to buy may have increase/decreased in price. I did not want to take a chance to be out of the market for three days.


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## james4beach (Nov 15, 2012)

On the other hand, nobody can predict the FX market and even if you're stuck for three days, the outcome is not necessarily going to be any worse.

You might also be interested in the short-first gambit at TD, though this is for non-registered
http://canadianmoneyforum.com/showthread.php/64970-ShoGam-short-first-gambit


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## humble_pie (Jun 7, 2009)

james4beach said:


> Ouch. Thanks for sharing this. I use TDDI but never tried a gambit inside the RRSP.
> 
> What I've figured out though is that TDDI is one of the worst brokerages for gambits.



not really

there are far "worse" brokers than the big green when it comes to currency gambit arbitrage. There are brokers who will refuse outright. There are brokers that put up enormously more ignorance, trouble & general havoc than the TD.

i think i've posted this like maybe a thousand times? the only brokers whose online platforms permit instant online currency gambits are BMO & royal bank. These are the only 2 brokers in the whole of canada. Both have other aspects & service features that many clients find inferior to similar services at the TD. It's the old story. No one broker is perfect. It's a question of finding the broker service mix that fits a client's needs.

i for one think a backup account at bmo or roybank is a good idea, for clients who want to gambit frequently. Typically these are clients with US dollar salaries or US businesses or possibly a RRIF that holds strictly US securities & is now subject to mandatory withdrawals in canadian dollars.

as for the TD. last summer the big nobs commanded all the call centre licensed reps to stop offering web commissions for gambit trading & also for option pair trading. Reportedly the big green nobs were steamed about these, because too many LRs had been giving away the farm, or so the nobs thought.

as a result, the younger & even the middle-experienced LRs are being severely strict about gambit sell commissions. Clients are now to pay $43 for a currency gambit sell order.

clients should understand that the TD's mainframe does *not* and wlll *never* permit instant online gambit selling. That is why a licensed rep has to be contacted. The LRs have to contact the compliance department with a memo explaining that the instant sell is not an official short position & it is legitimate, because the client has just bought the shares in the opposite currency account.

imho parties should understand that such gambit sell side phone calls are an additional burden for brokers & it is fair for them to charge a fee. Personally i don't find a $43 fee to be outrageously unreasonable, although it is somewhat on the high side.

.


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## familyman (Apr 6, 2015)

Hey humble_pie, I'm wondering if you know if this is also true for Questrade. I recently opened an account with them to trade OTC stocks and know that you can do Norberts Gambit with them, just do I have to call a LR to complete it? You were mentioning it was only with RBC and BMO but I'm wondering if you were referring to just physical banks and that's why you didn't include anybody else...


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## humble_pie (Jun 7, 2009)

familyman said:


> Hey humble_pie, I'm wondering if you know if this is also true for Questrade. I recently opened an account with them to trade OTC stocks and know that you can do Norberts Gambit with them, just do I have to call a LR to complete it?
> 
> You were mentioning it was only with RBC and BMO but I'm wondering if you were referring to just physical banks and that's why you didn't include anybody else...




familyman many cmffers who are questrade clients say they are able to gambit successfully there, so i'm sure you will be able to as well.

first though i'd like to clear up what might be a gray area re having to phone or not having to phone a broker to carry out a gambit sell side.

as mentioned, only bmo & roybank have online platforms that can accept instant gambit sell orders. All other brokers have to be phoned to do an instant gambit sell. Questrade is among the brokers that have to be phoned to do an instant gambit sell.

but there is a handy workaround. Most questrade clients appear to be using the DLRs to overcome the above problem (the commission for a phone order is likely to be far higher than for an online order.)

do you know the DLRs, familyman? these are a pair of canadian ETFs that were created by horizons betaPro strictly to handle gambit currency arbitrage trades. The advantage is that DLR.U is pegged, therefore clients lock in their exchange rate the moment they purchase DLR, which operates in CAD.

this means that, howsoever long it takes a broker to journal DLR over to the US side of an account - typically from overnight to 3 days - the client is neither gaining nor losing with his US dollar inventory. When the journal is completed, the client can send a low-cost online order to sell DLR.U.

the above strategy is attractive at questrade since - we are told - it costs nothing to buy the ETF DLR. There will be a commission to sell DLR.U but still, the entire gambit loop is very thrifty & appealing.

as with many other things in life, though, there is a caveat. The DLRs don't work as well in reverse. Remember that bit about only DLR.U is pegged? it means that a client wishing to exchange USD into CAD, who buys DLR.U as a gambit carrier stock, will be exposed to currency fluctuation for as many days as it takes to journal the position.

best of luck with this strategy.


.


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## mordko (Jan 23, 2016)

familyman said:


> Hey humble_pie, I'm wondering if you know if this is also true for Questrade. I recently opened an account with them to trade OTC stocks and know that you can do Norberts Gambit with them, just do I have to call a LR to complete it? You were mentioning it was only with RBC and BMO but I'm wondering if you were referring to just physical banks and that's why you didn't include anybody else...


With Questrade you can either email or phone or chat and the journaling will be completed the same day you send your email, assuming your original purchase has settled. You can't initiate the journaling step automatically. On the plus side, there is no commission to buy DLR.TO and you effectively aquire USD the moment you bought DLR.


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## humble_pie (Jun 7, 2009)

mordko said:


> With Questrade you can either email or phone or chat and the journaling will be completed the same day you send your email, assuming your original purchase has settled. You can't initiate the journaling step automatically. On the plus side, there is no commission to buy DLR.TO and you effectively aquire USD the moment you bought DLR.



lol like to plagiarize some?


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## mordko (Jan 23, 2016)

As someone who has actually done Norbert's gambit at Questrade, I am in a position to provide a more accurate answer. For example, calling isn't the only way to complete the journaling step. As someone who has more than one brain cell, I can provide a succinct answer. Few people can get beyond HPs first paragraph without falling asleep.


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## humble_pie (Jun 7, 2009)

mordko said:


> As someone who has actually done Norbert's gambit at Questrade, I am in a position to provide a more accurate answer. For example, calling isn't the only way to complete the journaling step. As someone who has more than one brain cell, I can provide a succinct answer. Few people can get beyond HPs first paragraph without falling asleep.



lol you were someone at questrade who begged for help & assistance from me re gambit trading, at a time not too long ago when you were getting it quite wrong!

your "answer" is misleading in that it conveys the idea that online DLR gambit trading happens instantly. Only later so you mumble a few words about how the stock has to settle first, before it can be journalled ...

dear gambit novice mordko, do you not understand - not even today - that the delays in most broker mainframe settlement systems, including questrade's, are the reason, the core, the essence, the very nuts-&-bolts of why gambit trading is a little bit tricky?

.


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## mordko (Jan 23, 2016)

humble_pie said:


> lol you were someone at questrade who begged for help & assistance from me re gambit trading, at a time not too long ago when you were getting it quite wrong!
> 
> .


You are delirious. I have been doing Norbert's gambit at Questrade for quite some time, way before I heard of the non-sauce version of HP. The discussion you are referring to was recent and involved two issues:

1. You argued (crazily, as per usual) that Norbert's Gambit is not the right name.

2. I was questioning why people use anything other than DLR.TO. Out of curiosity - it had absolutely no impact on me. Using bank stocks for the gambit may make sense for people using brokerages OTHER THAN Questrade because they would have to pay commission for DLR.TO.

And... Yes, I did ask the question "why would anyone use anything other than DLR.TO?". "Begged for help"??? Really??? Gee.


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## familyman (Apr 6, 2015)

humble_pie said:


> familyman many cmffers who are questrade clients say they are able to gambit successfully there, so i'm sure you will be able to as well.
> 
> first though i'd like to clear up what might be a gray area re having to phone or not having to phone a broker to carry out a gambit sell side.
> 
> ...


Thanks humble_pie. I am starting to be more aware of the DLR's. I watched a video on youtube from MoneyGeek about Norbert's Gambit and he shows you how to do this maneuver exactly, and he first buys the American dollar etf by using DLR.TO. He then gets them journaled to DLR.U.TO and sells them

You are mentioning DLR.U, are you just leaving out the .TO? Sorry if this is a noob question...


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## humble_pie (Jun 7, 2009)

familyman said:


> Thanks humble_pie. I am starting to be more aware of the DLR's. I watched a video on youtube from MoneyGeek about Norbert's Gambit and he shows you how to do this maneuver exactly, and he first buys the American dollar etf by using DLR.TO. He then gets them journaled to DLR.U.TO and sells them
> 
> You are mentioning DLR.U, are you just leaving out the .TO? Sorry if this is a noob question...





familyman, was your video Jin Choi's? if so, an excellent resource, good for you for finding it. I'm taking the liberty of posting the link below.

i believe i'd heard of choi, a talented PhD in finance from western U. He's one to watch, imho. As moneyGeek, he appears to be doing a number of promotional videos for questrade investors. These have high educational content so they're a win/win/win, as the investor client can gain helpful knowledge.

the only thing choi doesn't make clear in his video is that moving from USD to CAD via the DLRs opens a 2 or 3 day currency risk, since only DLR.U is pegged. This in itself is not the end of the world, since CAD as a currency will usually float less drastically than might a gambit carrier stock such as RY or TD over the same 3-day period (be sure you're not opening a risk window by buying DLR.U just before the bank of canada makes a big announcement, though)

your question? yes, i'd meant DLR.U.TO, if that's how questrade deploys the ticker. Both DLRs trade on toronto.

https://www.youtube.com/watch?v=4UQjz8ZoM0U


.


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## familyman (Apr 6, 2015)

humble_pie said:


> familyman, was your video Jin Choi's? if so, an excellent resource, good for you for finding it. I'm taking the liberty of posting the link below.
> 
> i believe i'd heard of choi, a talented PhD in finance from western U. He's one to watch, imho. As moneyGeek, he appears to be doing a number of promotional videos for questrade investors. These have high educational content so they're a win/win/win, as the investor client can gain helpful knowledge.
> 
> ...


 Yes, that's the video I was referring to. So if there's a 2-3 day risk if doing USD to CAD, is it the same from CAD to USD?


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## humble_pie (Jun 7, 2009)

familyman said:


> Yes, that's the video I was referring to. So if there's a 2-3 day risk if doing USD to CAD, is it the same from CAD to USD?




no, the currency risk is only from USD to CAD.

remember, DLR.U is pegged. It hovers always around $10 USD. So the buyer of DLR (the canadian version of this ETF) is effectively locking in his exchange rate at the moment he buys DLR. 

take a look at the longterm charts, family. You'll see how DLR has risen over the past several years (build a chart since inception) while DLR.U has flatlined because of the peg.

.


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## familyman (Apr 6, 2015)

Gotcha. Thanks!


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