Your Complete Guide to Index Investing with Dan Bortolotti

Norbert’s Gambit at CIBC: A Case Study

Norbert’s gambit is an excellent way to reduce the cost of converting Canadian and US dollars, but not every brokerage makes it easy. Recently Justin Bender helped a client of our DIY Investor Service with a large currency conversion inside an RRSP at CIBC Investor’s Edge. It saved the client hundreds of dollars, but it was a complicated transaction and we thought other CIBC investors would benefit from learning the steps.

The difficulty stems from the fact that CIBC does not allow you hold US dollars in registered accounts. Whenever you buy or sell US-denominated securities, the brokerage forces you to convert the currency with the usual spread.

In the example below, the goal was to convert approximately $100,000 CAD to the equivalent in USD, and then use the proceeds to purchase a US-listed ETF. The prices and exchange rates were current at the time Justin made the transactions. For simplicity, we’ve rounded some numbers and ignored the $6.95 trading commission that applied to each trade.

Step 1

When doing Norbert’s gambit, we use the two versions of the Horizons U.S. Dollar Currency ETF (DLR / DLR.U). So Justin first bought 10,000 shares of DLR, which was trading at $10.17 CAD:

10,000 x $10.17 CAD = $101,700 CAD

Step 2

He then called CIBC Investor’s Edge and asked to speak with a trader (the regular customer service reps will not be able to help with this step). He asked the trader to sell 10,000 shares of DLR.U, which was trading at $9.97 USD:

10,000 x $9.97 USD = $99,700 USD

Since CIBC does not allow you to hold US cash in an RRSP, the brokerage automatically converted  those USD back to CAD at their sell rate of 1 USD = 1.0132 CAD:

$99,700 USD x 1.0132 = $101,016 CAD

At this point, the investor started with $101,700 CAD and now has $101,016, for a loss of $684 CAD because of the forced conversion.

Step 3

Next Justin placed an order for $99,700 USD worth of a US-listed ETF. Now CIBC made another forced currency conversion, this time taking the $101,016 CAD and converting it to USD at their buy rate of 1 USD = 1.0242 CAD:

$99,700 USD x 1.0242 = $102,113 CAD

Step 4

Once again Justin phoned CIBC, and this time asked the trader to apply “FX netting” to the USD trades. Sometimes this procedure is called “exchange rate matching” or “washing the trades.” Whatever term the brokerage uses, the idea is the same: they retroactively apply the same exchange rate to both the buy and sell transactions. So instead of converting the $99,700 USD at the 1.0242 CAD buy rate in Step 3, they will apply the same 1.0132 sell rate applied in Step 2:

$99,700 USD x 1.0132 = $101,016 CAD

Now the investor has effectively paid $101,016 CAD for the US-listed ETFs, not the $101,700 CAD we started with. That’s a savings of $684 CAD, which cancels out the loss suffered in Step 2. The currency spread “comes out in the wash.”

In the end it cost the client $101,700 CAD to purchase the US-listed ETF, when it would have cost $102,113 CAD without the FX netting. That’s a savings of $413 CAD (not including commissions) on the transaction. On smaller transactions, the brokerage’s currency spread would have been even higher, and the relative savings that much bigger.

Call before you dig

If you’re going to try this at home, make sure you call the brokerage to request FX netting as soon as possible after making the trades. The trader Justin spoke to said it had to be done before 3 pm EST on the same day. You may even want to call CIBC before you place the first DLR trade and confirm they will do this for you: don’t be surprised if the person you speak to doesn’t understand what you’re trying to do.


  1. dan August 29, 2013 at 8:23 pm

    Another question…

    Do I need to wait for the BUY to be complete, before doing the SELL?

    I’m using the practice account, my BUY is pending ( trying after hours) and my SELL got rejected ( there were insufficient holdings in your account)

  2. Canadian Couch Potato August 30, 2013 at 8:06 am

    @dan: You don’t need a margin account unless you want to borrow to invest (not recommended). Yes, the buy order must be filled before you place the sell order. The problem here, I think, is that you’re trying to do this when the markets are closed, which is not possible.

  3. dan August 30, 2013 at 12:00 pm

    Thanks CCP, It all makes more sense now that you explain it (and the markets are open)

    Two more bits, if I may:

    – When doing a trade there are two places to choose currency: Account# and Market. Do both have to match on trade of the gambit? (CAD & CAD to buy, USD and USD to sell)

    – I was able to do a buy and a sell with RY, but when trying to sell DLR.U, I got “We are unable to accept an electronic order for this symbol at this time. To place an order for this symbol, please contact your RBC Direct Investing Inc. Investment Centre.”. Did I do something wrong or DLR is not setup for Norbert’s?

    Much thanks!

  4. Canadian Couch Potato August 30, 2013 at 12:09 pm

    @dan: You do need to choose USD or CAD from the “Account” menu and match that to the currency of the trade. So you buy DLR, chosse the CAD side of the account. To sell DLR.U, choose the USD side of the account. But the mistake here is that “Market” does not refer to currency. It’s asking you whether the security is listed on the TSX (Canada) or one of the New York exchanges (US). DLR.U is listed on the TSX, so you need to select Canada.

  5. Steve September 18, 2013 at 2:21 am


    I have run into the same problem with using DLR and DLR.U within the RBC Direct Investing practice account.

    I did the buy of DLR on the CDN account and am trying to sell DLR.U from my USD account on the CDN market. It keeps giving me the “We are unable to accept an electronic order for this symbol at this time” message.

    One thing that might be worth mentioning is that the buy order hasn’t settled yet. Should that matter? It seems happy enough if I try to sell DLR though (either from the CDN account or from the USD account – although it warns me about possible currency exch).

    Or is this just an issue for the RBC practice accounts? Maybe this works just fine with the normal accounts?

    Does anyone know? @Dan – did you ever get it to work?

    Thanks for the info and great site CCP!

  6. Canadian Couch Potato September 18, 2013 at 7:53 am

    @Steve: We have done the “instant” Norbert’s gambit at RBC many times with clients (i.e. no need to wait for the first trade to settles before executing the second). I think the issue is the practice account.

  7. Justin Bender September 18, 2013 at 11:00 am

    @Steve – this is definitely a specific issue with the practice accounts – I have never been able to complete this transaction in my own RBC DI practice account (I receive the same error message). It usually works perfectly in a real account.

  8. RG September 23, 2013 at 12:42 pm

    @Justin Bender & CCP:
    I just signed-up for RBC DI and want to buy USD$ ETFs in my RRSP, but hold only CDN currency at the moment. You both sound confident that it’s easy to execute the gambit instantly with RBC DI, can either of you please explain (or provide a recent link) outlining the details?

    Thanks, great stuff here!

  9. Canadian Couch Potato September 23, 2013 at 7:39 pm
  10. RG September 23, 2013 at 10:02 pm

    @CCP: Thanks for the link, I found this myself but I thought perhaps it was dated, as it was written over a year ago and the author references 3-4 biz days for the journal switch to clear. Your post references an “instant” gambit, so I thought perhaps things have changed…or is the process outlined by Vicky still the best way to execute the gambit as far as you know? Thanks again. RG

  11. Canadian Couch Potato September 23, 2013 at 10:20 pm

    @RG: Sorry, you’re right, that wasn’t very helpful. The steps are the same, but you don’t need to call to request the journalling. Just sell DLR.U immediately.

  12. dan September 26, 2013 at 12:21 pm

    Is there anything remotely related to this, but for EUROs?
    I need to buy those fairly often.

  13. Canadian Couch Potato September 26, 2013 at 12:28 pm

    @dan: Even if you can find a brokerage account that allows you to trade in euros (and some brokerages do offer this) you would have to find an interlisted security that trades on the TSX and a euro-denominated exchange. I highly doubt such a thing exists.

  14. Steve September 26, 2013 at 11:37 pm

    Hi Justin and CCP,

    I executed the gambit in my real RBC DI account using DLR and DLR.U last week as described in the comments above and it went through just fine. As you said, I didn’t need to wait for the settlement date or anything.

    Thanks for all the help!

  15. Canadian Couch Potato September 26, 2013 at 11:41 pm

    @Steve: Glad it worked!

  16. Justin Bender September 29, 2013 at 5:24 pm

    @Steve – excellent news!

  17. Matt October 21, 2013 at 3:03 pm

    I need help :)

    I just called CIBC IE and spoke to a trader. I was told that I cannot sell DLR.U because I only have DLR. So in the example above, I will buy 10,000 DLR, and after it’s been filled, the trader told me that I can now sell 10,000 DLR but I don’t have any DLR.U to sell ??

    This is different from say using RY or TD as they can journal it over to NYSE and sell and park the money in a USD money market fund to avoid converting back and forth. But I was told that if I use DLR, it won’t work.

    Any help?

    BTW, anyone interested, the current DLR, DLR.U spread is 1.03115 whereas CIBC quote me a buy rate of 1.0446 and a sell rate of 1.0146. So that’s a savings of 1.345%. Is that right?

  18. Justin Bender October 21, 2013 at 3:31 pm

    @Matt – you’ve just stumbled across a trader who doesn’t know what they’re talking about. Ask for someone more senior. If you purchased 2,500 shares of DLR, you need a trader to sell 2,500 shares of DLR.U for you. I would recommend that you do this at around 11 am, so that you have plenty of time to get this sorted out, place the US-listed ETF buy trade, call the traders back, and have them FX net the trades for you (it’s too late in the day now). Always take down the name of the trader, the time you called, and the date of your call.

    As for the rates, the best way to understand how many US dollars you are receiving in both situations is through a numerical example – let’s assume you’re converting $25,000 CAD to USD:

    1. CIBC quotes you 1.0446 to buy US dollars.
    In this example, divide your $25,000 CAD by 1.0446 in order to calculate the number of US dollars they are offering you. It would be $23,932.61 USD

    2. DLR is quoted at an ask of $10.27 CAD and DLR.U is quoted at a bid of $9.95 USD per share.
    In this example, divide your $25,000 CAD by $10.27 to determine how many shares you can buy – this will give you 2,434.2745 shares (I know you can’t purchase partial shares, but let’s pretend you can). Now you turn around and sell your 2,434.2745 shares of DLR.U for $9.95 USD per share and end up with total USD proceeds of $24,221.03.

    You are now ahead $288.42 USD ($24,221.03 USD – $23,932.61 USD)

    Let me know if this makes sense – good luck!


  19. Amie October 31, 2013 at 7:12 pm

    I’m with Questrade and it looks like they too need DLR to settle before they will journal to DLR.U – and that annoyingly took 3-4 days. Has someone been able to journal and sell DLR.U before the DLR buy settled?

  20. Tinu November 10, 2013 at 12:07 am

    @Amie – I’m with qtrade not questrade, but I had to wait 3 days before putting in the request to journal over to US side of my RSP. Also, by holding it for one day, I was entitled to free commission on the DLR purchase.

  21. Tennis Lover November 24, 2013 at 9:01 pm

    I did Norbert’s gambit on a non-registered account with BMO Investor Line. Buying DLR.U on the US side of the account and selling the same number of shares of DLR on the Canadian side of the account. For about a week the Canadian side of the account showed negative DLR shares and the US side of the account showed an equal number of positive shares. Eventually the shares were combined. I thought everything was fine until this weekend when I noticed an interest charge on the Canadian side of the account at 21% interest. I guess that BMO was charging me for the negative shares in my Canadian account or perhaps the negative balance. I plan to call and complain this week. Has anyone else had this problem?

  22. Canadian Couch Potato November 24, 2013 at 9:26 pm

    @Tennis Lover: This is actually a fairly common problem. It can happen if the trades settle in the wrong order, or if there’s a holiday in the US but not in Canada (or vice versa), or if the brokerage just makes a mistake. Definitely call them and ask what happened: if it was their error, they will reverse the interest charge.

  23. Tennis Lover November 26, 2013 at 8:22 pm

    Thanks. One short call and the charges were reversed.

  24. Vinashko December 20, 2013 at 4:52 pm

    I did the NG with CIBC this week. Did it Thursday with my wife’s account since the transaction was smaller. This was great, I talked with a trader who knew what I was trying to do and I ended up talking to the same guy when I called back later to apply the FX netting. The back office was busy so he couldn’t give me the exchange rate, but said he would apply it later that day, which he did.

    On Friday, I called in to sell the DLR.U and the CIBC trader checked with her supervisor and came back to tell me that what I wanted could not be done since there was no such thing as DLR.U. I then told her that I had done the transaction in another account the previous day and she got it figured out.

    With Friday’s transaction, the trader I talked to for FX netting asked me if any of the trades were over $100K. He applied the FX netting, so no issues there since none of my trades were that large. Is there any reason why the $100K level is important for tax, customs, policy reasons…anybody know?

  25. john January 3, 2014 at 11:35 am

    I want to sell a US $ denominated security and purchase an ETF that trades in US $. If both transactions will occur in the same Investor’s Edge account do I still need to go through the DLR/DLR.U transaction or can I just phone up and ask for FX netting? Thanks for any insight.

  26. Canadian Couch Potato January 3, 2014 at 11:53 am

    @John: No need to use Norbert’s gambit for this type of transaction. You should be able to avoid currency conversion charges by calling to arrange FX netting. But I would definitely give CIBC a call beforehand to make sure.

  27. john January 4, 2014 at 10:59 am

    Thanks for your help!

  28. Alon January 21, 2014 at 10:07 am

    I did a NG last year when I was setting up my ETF Portfolio. I used DLR/DLR.U at Questrade and had no issues. At that time I was converting very large sums so there was no doubt of my course of action. I’m doing my first significant fund additions to my RRSP (as well as a rebalancing). I’m uncertain as to whether NG is worth it when the sum is so small ($2-3K). I would like to add that amount to VXUS within my RRSP but am considering using a CDN Int’l EQ fund (i.e. XEF) instead.


  29. Canadian Couch Potato January 21, 2014 at 10:29 am

    @Alon: NG is of pretty limited usefulness with such small transactions, even if you are paying only one trading commission at Questrade (free to buy, $5 to sell). You’ll save a little over the usual retail spread, but not much.

  30. Oldie March 14, 2014 at 12:32 am

    @CCP: I need to convert a largish sum of USD to CAD. The last time I did this was using TD which was trading at about $84, so the bid-ask spread of about 2 cents divided by the share price worked out to about 0.00024. It worked out great — easily and cheaply.

    This time around I thought I’d finesse the process a little and select a frequently traded doubly listed stock with as high a price per share that I could find. CP shares are selling on the NYSE for about USD$150+ and the US volume is good — 800,000 per day. However, the volume of trade on the TSE is only 200,000 to 300,000. As this is the second phase of the Gambit which requires as rapid sale as possible to reduce market risk, could this lower daily volume constitute inordinate delay of getting rid of my CP shares? (I would otherwise use CIBC stock CM which trades in the range of 1 Million a day on the TSE).

  31. Oldie March 15, 2014 at 2:45 pm

    I thought I’d report back on my most recent Norbert Gambit experience in some detail, to give some insight as to what actually goes on behind the scenes during your requested transactions, and to warn how a little incomplete knowledge could get you in trouble. As you can see above, I was considering trying to use a higher priced share, reasoning that if the lowest spread was 2 cents, 2 cents divided by, say $150 for CP shares, would come out to the lowest number possible for the Gambit cost. I was a little concerned about the rather low volume of CP trade on the TSE side, only averaging 200k to 300k units a day. So I kept on looking for suitable high priced stocks and came up with Agrium (AGU) which traded at $95 on the NYSE with an average volume of 700k daily, and about 400k daily on the TSE. Finally I came back to review the trusty shares of Royal Bank and CIBC with decent volume on the NYSE and up in the millions on the TSE.

    Armed with all this information, I stepped up to the plate. I was extremely fortunate to have been lined up, by special arrangement courtesy of my professional organization’s financial advisory wing, with a phone connection to a stock trader, for a one-time-only situation (yes, I had said this last year, but they were very accommodating and agreed when they understood that I would likely never need to do this again).

    I briefly reviewed my research with him, and he was able not only to review the average trade volume for all my candidate stocks, but also the actual asks and bids lined up, and for these asks and bids, not only the primary layer, but also going back to the secondary layer of asks and bids. I had only considered a market risk due to delay for thinly traded stocks on the SELL side; however, for thinly traded stocks on the BUY side, if one has a large buying batch that overwhelms the market, this can apparently drive up the price of the later lots in your batch to be sold. I had not considered this. Also, from my eye-ball view of the 15 minute delayed view of the markets, I was only able to get an approximate assessment of the volatility of the stocks in question. With my stock trader on the switch, he was able to read the actual price and size of the bids that were already lined up behind the stocks.

    Distilling quickly through all this information, it quickly became apparent to me that all my prior assumption of the high ratio of price to assumed spreads came to nothing. Finally, the best candidate turned out to be the same last year’s trusty warrior, TD; despite the disadvantage of a lower price — it had split since last year and was now $46 in the US, it traded 800k daily on the NYSE and 3Million on the TSE.

    We got all our ducks in a row, and he actually set up two consoles to set up the trades, one for buy on NYSE and one for sell in TSE, pre-entering the trade specifications to save time during the transition. I was intending to convert USD$600k, so we split it into 2 tranches of $300k just in case too large an offer each time affected the price. He was able to read the asks lined up for TD and predicted that there would be enough asks for the price to only drift minimally, if at all.

    So for each tranche, the buys were done in less than 30 second or less, I estimated, and the sale was requested immediately and took place again within 30 seconds. I later reviewed the records and all the buys and sells took place at the same price, except for my first buy, in which the last 100 shares were bought at 1 cent higher price than the preceding shares.

    At the end, although the timing was not what I would rather have planned (during the last hour of tracing on a Friday afternoon) I was able to convert for an effective rate of 1.1092 net of commission at 3:30pm EST. As a rough proxy for the spot rate, DLR traded at 11.09 continuously from 2:00pm to closing at 4:00pm EST. I may have been aided by some slight inadvertent upward trend in price during the gambit, but the TD price was relatively stable during the process. There was a small blip at 3:30 which may have been caused by me.

    It was a lot of work in prep and perhaps even overkill regarding who my point man was. But on the other hand, with a large sum you can’t be too careful, and I saved thousands by avoiding potential glitches, and so can anyone, if they are prepared to put in due diligence. Bottom line: All other things being equal, I would always use a heavily traded (at both ends) bank stock in the unlikely event that I would ever do a large conversion of cash like this again; my go-to choice always seems to end up to be TD.

  32. Kris June 17, 2014 at 12:04 pm

    I just tried NG today with CIBC Investor’s Edge, to convert USD to CAD.

    I bought shares in DLR.U and spoke to a trader. The trader told me I would have to wait the three days for my purchase to settle, then call back to request to journal the shares over to DLR. Then sell DLR and wait another three days for the sale to settle.

    Does that sound right? I thought I could complete the transaction in 3 days, not 6?

  33. Canadian Couch Potato June 17, 2014 at 12:19 pm

    @Kris: You’re doing this in a non-registered account, right? If so, some brokerages do indeed make you wait for the trade to settle before you journal the shares. And the sell trade will take another three days to settle, but you should still have access to the CAD in your account right after the sale: you wouldn’t have to wait another three days for that.

  34. Kris June 17, 2014 at 12:24 pm

    Correct, non-registered (forgot to mention). Thanks for the reply.

  35. Jim R February 3, 2015 at 1:46 pm

    I just attempted NG using DLR.u/DLR at CIBC in a non-registered account to convert some money from USD to CAD.

    When attempting to purchase DLR.u (phase 1 of the transaction) I got to the last screen where it asks for trading password and was hit with this message:

    “Important: You have selected a security on the Canadian market, but are trading it in US dollars. This will result in a foreign exchange transaction. You can change your order, or enter your trading password to proceed.”

    This seems to have been caused because I was attempting to buy DLR.u using my USD trading account.
    Needless to say, I stopped at this point.
    Can anyone venture what I’m doing wrong here? DLR.u is USD denominated, right? So, shouldn’t I be able to use my USD trading account to purchase it regardless of the fact that it’s on the TSE.

  36. Canadian Couch Potato February 3, 2015 at 2:04 pm

    @Jim R: You should to confirm this with CIBC, but it sounds like this is a generic warning that presumes all TSX-listed securities are traded in CAD. I know that at RBC Direct you get a similar warning, and it’s safe to ignore it. If you are buying DLR.U with USD cash there would be no “foreign exchange transaction.”

  37. Jim R February 3, 2015 at 2:11 pm

    Thanks, CCP. That thought did cross my mind, but figured best to ask here first. Also, comforting to know RBC Direct gives you a similar warning.
    I will contact CIBC to confirm as you suggest.

  38. Kris February 3, 2015 at 3:03 pm

    @ Jim R: I received the same message when completing my transaction using a CIBC non-registered account. You can safely ignore it.

  39. Jim R February 3, 2015 at 8:55 pm

    Update on my transaction:

    I called CIBC and confirmed with a trader that the scary message could be ignored.
    I purchased DLR.u myself online with the trader still on the phone and checking the trade. All was good.
    I then attempted to sell DLR online and hit a snag as the payment could only go into my USD account thus resulting in a currency conversion.
    The trader then took over and did the sale (at $6.95 commission). The trader confirmed that in the future I would have to get a trader do this for me (as expected at that point).

    So, I appear to have successfully converted my USDs to CADs. Will wait to see how it settles.

    @Kris, was it your experience that you had to involve a trader?

  40. Kris February 4, 2015 at 12:30 pm

    @ Jim R: Yes, but for me I only needed the trader to journal over the shares from the USD side to the CAD side. This action should have ended up with the shares in your CAD account, meaning you would then be able to sell in CAD. Not sure why your experience was different.

  41. Jim R February 4, 2015 at 5:42 pm


    I suspect the trader journaled the shares over and then made the trade. He did not explicitly say he was journalling the shares, but he would have had to AFAICT.

    Next time, I’ll do like you did and get him to only journal the shares.


  42. MN January 24, 2016 at 8:13 pm

    I also did NG a few days ago in my CIBC InvestorEdge non-RRSP account. I did converts US$ to Candian. I bought online the DLR.u shares with my US$ fund and, during the process, ignored the warning message Jim R mentions. Attempting to do online trading on DLR, the system did not allow me to. I called the InvestorEdge and got a trader on the phone. He then journaled the shares to the Candian side and put the trade in to sell. The trade was complete right away and I asked for fx-netting, to which the trader replied, there is no need for it as the trades on each side of the market had been completed in the respective currency.

    In the process, I converted $US4000 and made a net saving of about $50 when compared to usual spread conversion. The Canadian fund was available after a few days.

  43. Jon June 2, 2016 at 11:05 am

    Dear CCP or anyone else who’s done this: Does this work the other way around at CIBC? I have US listed ETF’s (VTI and VXUS) in my RRSP that I need to change back to CDN in order to rebalance with more bonds. Would I call CIBC-IE to sell VTI to DLR.U? Do I need to mention any FX netting before I convert DLR.U to DLR?


  44. Canadian Couch Potato June 2, 2016 at 11:10 am

    @Jon: This post is a bit out of date. My understanding is that CIBC now offers USD conversion in RRSPs at very close to the spot rate. This is to compensate investors for the fact that they do not offer USD registered accounts. All of which is to say Norbert’s gambit in an RRSP and CIBC is probably not necessary anymore.

  45. Jon June 2, 2016 at 3:09 pm

    Thanks for the update, as always, I always appreciate your advice. So to clarify, I should just sell VTI and buy VAB without the hassle of doing a gambit? I’m trading 140k.

  46. Canadian Couch Potato June 3, 2016 at 3:09 pm

    @Jon: I would suggest calling CIBC first to confirm. Though I will warn you that brokerages tend to be less than forthcoming about their currency conversion practices. This may be of interest:

  47. M February 2, 2017 at 2:16 pm

    Any update on the way now that USD RRSP accounts are now available?

  48. Canadian Couch Potato February 2, 2017 at 2:26 pm

    @M: Justin Bender is working on a series of videos with instructions for Norbert’s gambit at each brokerage. Here’s the RBC one. Videos for the other brokerages will follow as time and resources permit:

  49. brian March 26, 2017 at 11:27 am

    I think Norberts gambit is out of date and too complicated at this point. discount exchange brokerages offer such a competitive rate and easier method to convert the currency.

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