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.
Not bad. I’d say $400 is worth a phone call or two. :) I use Questrade, where I am allowed to hold USD in any account. You still have to phone them, though, to ask them to journal over your shares to the opposing market. I have done this twice at Questrade and found this to be a relatively painless process – actually the trade desk reps on the phone both times have known exactly what I was asking for, and why I was asking for it, once they saw the security in question was DLR. :-) Still wish it would work like some other brokers and automatically “wash out”, saving me the phone call… but overall not bad.
The simple answer here is to ditch CIBC. Even BMO Investorline allows the holding of US $s in an RRSP.
Of course, there are two annoyances with BMO (in this situation :-): 1) there is a “US Side” and a “Canadian Side” of each account, and you can’t move something between the sides yourself. You have to call and ask the support staff to do it for you. It’s also impossible to tell from their website which stocks are on which side. This makes a difference because if your US stocks are on the “Canadian Side”, your $US dividends will be hit with a currency conversion and credited to your account in $CDN. If they’re on the “US Side”, the dividends will be credited in $US. 2) You can’t directly make transactions with DLR.U. You have to call their support staff and have them make the trade on your behalf (which they will do for the cheap web prices — not the excessive live-broker charges). I asked why this was and was basically told that their customers are confused and get themselves into trouble too frequently to be allowed access. I’m still waiting for an “advanced mode” on BMO’s site.
Not to be pedantic, but is DLR/DLR.U technically a Norbit’s Gambit? You’ve eliminated the underlying stock price risk are only left with the currency risk, which would have been identical to letting the brokerage perform the FOREX, but at a lower price.
That said, it’s a very handy way of easily saving a whole lot of money. I’ve done the traditional Norbit’s and the DLR(.U) and the latter is significantly easier.
@Chris: I’m not sure I understand your question. You mean to say that it’s not Norbert’s Gambit if there’s no stock price risk?
My understanding is that DLR was created precisely to allow the Gambit without stock price risk.
I’ve been meaning to write to say something nice about doing Norbert’s Gambit with RBC Direct Investing. I was nervous to try the gambit but have now done so 3 times with a lot of money involved. The RBC representatives were really good at holding my hand through the process the first two times even though one of them had never heard of the idea.
My main point in this note, however, is that you don’t need to ask them to “journal the transaction over to the US side of the ledger.”
When I first read about the gambit, the advice was something like, buy Royal Bank (or any highly liquid company) shares on the TSX; get RBCDI on the phone and get them to ask a trader to journal the transaction over to the other side of the ledger; and then sell it on the NYSE.
The first two times I did this with RBCDI phone assistance they told me emphatically that they did not have to journal the transaction for me. I just needed to follow a particular process with my online trades and they walked me through it. The third time I did it myself without them on the phone. That third time I did the whole manoeuver in about 2 minutes and saved hundreds of dollars. I am not guaranteeing anything here and I am no expert, but RBC (I am a client and have no personal or professional affiliation with them) is excellent.
Here was my method:
1- Purchase Royal Bank (RY) in Canadian $ on the TSX in my RSP account.
2- Confirm the transaction is complete using the “view order status” button.
3- Click the sell button to bring you to a page called “Stock Order Entry – Step 1 of 3” and on that page there is a large box with the words “Place Order” across the top in a blue-shaded band.
4- In the “Account #” pull down menu select the RSP – USD account (I am assuming you have already set up a US$ account within the RSP account).
5- In the “# of Shares” box, enter the number of shares you bought minutes ago
6- In the “symbol” box, enter “RY” just as you did when purchasing it on the TSX
7- In the “Market” pull down menu, select “US”
8- Set the Price button at Market Price (as opposed to using a limit / stop price)
9- Hit the Continue button
There are two levels of confirmation after this, the first one is the regular confirmation of the order you are about to place and the second confirmation is a warning that you are about to sell an equity in a currency different from the one you purchased it in, which is, of course, the whole point.
10- Accept all confirmations and you are done.
You have to do all the steps exactly right but pay special attention to steps 4 and 7 above.
Finally you get to have the fun exercise of checking your exact purchase and sale price in the two currencies and seeing the exchange rate you got (take into account the 2x$9.95 fee). Count the money you saved by not losing 50-80 basis points to the currency conversion and go spend it on something frivolous.
All the best to everyone and thank you CCP for putting me on to Norbert in the first place.
Noel
I’m probably too lazy… This is way too complicated for me. That, and the T1135 form hassle (and steep penalty risk for late filing) keep me buying Canadian listed ETFs, even if the MERs are higher.
Does someone have the exact steps for TD?
Seems simple. I tried to do this at questtrade. 1 month and about 4-5 emails/phone calls later and the journal request is still not done. They just say “give it another day or two, we’re processing a large number of requests”. I think they are trying to make it as difficult as possible for people because they lost their exchange commission.
I have successfully completed this process twice at Questrade. I did experience a couple days delay on the first one, but the second one seemed to go faster. Although I did get this response:
“A request to journal DLR.TO to DLT.U.TO has been placed and it will be processed within 2-3 business days. You will be able to view the changed symbol on your IQ platform once processed. Also, be advised that journal requests are processed as a gesture and we may not be able to journal stocks frequently . Going forward you will be responsible to trade stocks with the correct ticker.”
@Dan: Are these brokers legally obligated to complete this request? If we add up all the expenses of a Couch Potato, I would guess the huge spread charged for foreign exchange would be the largest, therefore, it would seem that whichever broker allowed and provided the easiest gambit process would gain the most clients.
For an RBCDI RSP account, could you just buy 10,000 shares of DLR and once that was complete then sell 10,000 shares of DLR.U and then the gambit would be complete?
@ Paul
At TDW, you can sign up for automatic wash trading in registered accounts – just have to call them, they will set it up. In non-reg accounts, you have to call a rep and have them journal the shares from Can to US side.
I find a better spread than DLR by using a stock, POT for example. I’ve used RY and RIMM before, but I would wait for a slow news day. RIM probably too volatile now, I undersand peoples’ desire for safety of DLR. Lots of cross-listed stocks in TSX and NY.
Lots of insight and detail posted in CMF site over past couple years.
http://canadianmoneyforum.com/showthread.php/15784-TD-Waterhouse-First-US-dollar-wash-trade-What-s-happening
Questrade and Virtual brokers flatly refused to allow me to perform the Norbert’s Gambit. Others have mentioned delays and harassment. Dan, is there a regulatory authority we can report them to? What should we do to ensure they do it and in a timely manner.
@Joel
For RBCDI, just buy 10,000 shares of DLR on the CAD side of the RRSP and immediately sell 10,000 shares of DLR.U on the USD side of the RRSP (use a limit order exactly on the ask and the bid and ensure that you are trading on the Canadian market for both trades). You can then immediately purchase a US-listed ETF on the USD side of the RRSP with the net proceeds from the sale of DLR.U
RBC will take care of cleaning up the accounts without the need for a phone call. Ensure you are not charged any interest for debits in your account (I have witnessed this before with one of our DIYers).
Good luck!
J
Thanks Justin!
@Que and Al: I’m not an expert in securities law, but I don’t think a brokerage is legally obliged to journal securities or to make it easy to execute Norbert’s gambit. Remember that by doing so you’re depriving them of a significant profit source. I’m not that surprised that some of the smaller brokerages (which seem to operate on thin margins now that they’re charging next to nothing for commissions) are pushing back a bit. This is one of the reasons I think there is some value in using one of the bank-owned brokerages.
Another thumbs up to RBC-DI for a very usable web platform. Norbert’s Gambit is a piece of cake to carry out in their accounts– no phone calls are necessary with the process. You can also try it out in their practice “dummy” accounts before you put your own coin to work.
I also use DLR/DLR.U for my Qtrade account. Like some other readers stated, I can manually transfer securities from my CDN account to my US account. The main drawback is that I usually have to wait 3 days for my DLR to settle before I can do the transfer, ie I can’t buy and sell simultaneously.
I’ve spoken to their rep, one way for me to do that is to do the trades over the phone, which will cost $40 min. Pretty good if you urgently need to buy some US stocks.
Re Questrade and VB “denying” a Norbert’s Gambit, could it be that the question was asked too directly? A lot of times, companies will try to “discourage” you from doing something, without explicitly denying you the service if push comes to shove. For example, if you phone Questrade’s customer support and ask “can I do Norbert’s Gambit”, they may say that they do not allow it. But, at least in my experience, when I have phoned their trade desk and asked for shares to be journaled, they have always done it. I have never mentioned the term “Norbert’s Gambit”, even though I am sure the trade desk people know I am doing that (especially when buying DLR/DLR.U).
With Questrade, it took 4 requests and 15 business days. The fourth mail was more of a complaint e-mail regarding the 2-3 business day delay not respected and the number of times I had to request the journaling of DLR to DLR.U. After the 4th, the representative told me they were sorry…. The shares were journaled after about 30 minutes.
Hi,
Still a little confused how to do it with RBC DI wothout. Having to phone on.
If you buy x shares of DLR on canadian side and sell x shares of DLR.U on US side, and leave it for RBC to clean up, won’t they apply their unfavourable exchange rate when they transfer the funds internally to clean up the negative in the account? Our wouldn’t you end up long DLR, and SHort DLR.U?
Sorry, I’m a bit of a beginner, but trying to understand how this works. The first time I bought US securities with CDN$, it took them over a week to settle the exchange and I lost a bunch of money on the change over that time.
Is DLR.U actually listed on NYSE? It still shows TSX when I look it up.
Any further explanation would be greatly appreciated.
Thanks
@Brian: One very important point is that DLR.U is listed on the TSX, not on a US exchange. That’s often a point of confusion. Otherwise you’re right in anticipating that you will have both a short and long position until the trades settle. It’s pretty confusing un you’ve tried it once or twice.
I can echo Dave L.’s comments… Qtrade is really amazing. I’ve done Norbert’s Gambit with my online brokerage at Qtrade, no problems. This is for my RSP account, which has a US side. I bought DLR, journaled them over to US side of my RSP account, and then sold as DLR.U to get the US funds. The journaling was done on the Qtrade portal, itself. I didn’t have to do it over the phone. But yes, I had to wait 3 days for the initial purchase to settle. Best to do this around a time when you think the currency isn’t as volatile.
Hi All,
Can anyone provide the Steps to doing Norbert’s Gambit online with Qtrade? It would be appreciated. I have only done it over the phone but would like to do it all online if possible. Any suggestions wou;d be appreciated.
Norbert’s Gambit on Qtrade with DLR as an example:
1) Go to the Equity Order Entry screen for your CAD account. Fill in all required fields. Do a Real-Time Quote on DLR from the Canadian Market. As previously recommended you should use a Limit Order.
2) Once the order is complete and DLR shows up in your CAD account you can immediately request it be journaled into your USD account. Go to “My Accounts” on the main menu bar and select “Service Centre” from the list of drop down options. Under the “Manage Your Accounts” heading is a link called “Transfer Securities”. This screen is straightfoward: select the drop down fields and request the transfer of DLR from your CAD into your USD account. It won’t happen right away — it usually takes 3 business days after your DLR trade has settled (for a total of ~5 days). Also, there’s no official confirmation that they are working on your request so you just need to be patient.
3) Once DLR has shown up in your USD account you can now sell it like any other equity with one huge caveat — Qtrade shows DLR as “DLR” in the USD account even though it should be “DLR.U”. You *must* sell it as DLR.U when you are submitting the sell order! If you sell it as DLR the system will process it as a CAD transaction and then convert it into USD using Qtrade’s FX rate which defeats the purpose of the entire exercise. So, enter DLR.U as the Symbol and put in a Limit order for the Canadian market. Fill in the rest of the fields and that’s it. You’ll have USD in your account once it settles.
Lastly, although there’s no trading commission on buying DLR there will be a commission charged for selling DLR.U. I guess Qtrade needs to make money at some point during the whole process!
Personally, I find the entire process works quite smoothly albeit slowly. As mentioned elsewhere, you’ve locked in the exchange rate with the initial purchase of DLR so you won’t suffer any currency risk while DLR is stuck in purgatory.
Good luck!
Thanks Hekyll
I’m a Questrade user
Have done this in the past and again last week. They’ve changed and simplified it.
First make sure your currency settlement options are set to “trade currency” (account management > currency settlement)
1) Buy DLR as normal – will use up your CAD funds, and commission free (except ECN fees) as it’s an ETF
2) Call the trade desk and ask them to journal DLR over to DLR.U. Will be free and the agent suggested that it will show up in IQ within an hour.
3) wait in IQ for the DLR.U shares to show up
NOTE: for the remainder of the day the DLR shares will also show (so you’ll have double the equity value) – don’t touch these ones.
4) Sell DLR.U as usual – you’ll get $USD less the normal commission
Done.
I use Q-trade. Question, If I wait 3 days for DLR to be transferred over to my US $ Account and then sell it as DLR.U, will I not be subject to any foreign exchange fluctuations? Can I sell the DLR.U while waiting for the securities to be journaled over? Is there a possibility of not having the sale go through/hit with fees?
@Frank, Hekyll, etc.: There seems to be some misunderstanding about the currency risk involved with Norbert’s gambit. Both DLR and DLR.U have the exact same currency exposure. That means once you buy DLR, you are exposed to USD/CAD fluctuations, and whether you can journal it to DRL.U in three seconds or three days makes no difference in terms of currency risk. Remember, DLR is traded in Canadian dollars, but its underlying holding is US cash.
This is very similar to comparing an unhedged S&P 500 ETF (like VFV) and a US-listed S&P 500 ETF (like VOO). They are traded in different currencies, but for a Canadian investor the currency risk is identical.
It’s quite different from doing Norbert’s gambit with an interlisted stock, like Royal Bank or RIM. In that case, you are not exposed to currency risk when you hold the NYSE-listed version, because the underlying holding is not currency: it’s the company itself. At any time, you can just journal the stock back to the Canadian side of the account and you haven’t gained or lost anything. (If this were not true, you could make a profit by journaling the stock back and forth as the currencies fluctuate.) In this case your risk is that the price of the stock will move during the interval between your purchase and sale.
Hope this makes sense. Let me know if you’d like me to elaborate in a blog post.
Hi Dan,
Thanks for the help. Elaborate in blog post please. I think I may be missing something.
If I buy DLR today and the Can/US exchange rate is $1.05, and I sell DLR.U in the future when the Can/US exchange rate is $1.10, I will be losing money correct?
If so is there a solution?
I think once you buy DLR, the F/X is locked in, as the DLR price fluctuates, DLR.U is steady at the 9.96-9.98 mark.
the journaling doesn’t change the number of shares, so once you buy DLR with $CAD, you can already calculate the ultimate $USD return (excluding that 2 cent fluctuation)
however once you get this started, there is no reason to hold either of the 2 ETFs as it doesn’t return income unless you resell the DLR to do some F/X speculating, and receive back a different $CAD amount.
@Frank: Yes, you will lose money if you buy DLR, then the US dollar falls relative to the loonie, and then you sell DLR.U. However, you would lose the same amount if you simply sold DLR without journalling it. Always remember that buying DLR is equivalent to buying a stack of US cash that is priced in Canadian dollars.
The only “solution” is not to buy US dollars at all. But the whole point of doing Norbert’s gambit is to by US dollars, usually with the intention of using them to buy US-denominated ETFs or stocks, which will ultimately expose you to the same currency risk.
Thanks Dan,
I got it now ! Slow but sure :-)
@Brian
I can confirm that it works in RBC Direct without having to do the phone call. I did it with POT (Potash Corp./Saskatchewan Inc.) a few times, buying on TSX (choosing the CAD side of the account) and selling on NYSE immediately (using the USD side of the account). I made sure to do it in the middle of a day with normal trading volume on the stock and used limit prices to reduce change of getting burned on a wild stock fluctuation.
However next time I need to do it I’m planning on using the DLR/DLR.U method outlined by Justin Bender above. It’ll be a much less stressful way of doing it. An additional benefit of the DLR/DLR.U method that hasn’t been mentioned above is that DLR/DLR.U doesn’t pay dividends. On one of my Potash moves, I didn’t pay attention to the dividend dates and I did the move in the ex-dividend period. RBC incorrectly credited my account with dividends after the journal, then debited the wrong side of my account to “fix” it, etc, etc. It was a few weeks before everything was straightened out. They were very good about fixing it, it didn’t cost me anything (they actually credited me some trades as compensation), but still not a hassle I want to go through again.
As Chris mentioned above for Questrade, you may see the stock showing on both sides for three days until everything settles, don’t worry about it and don’t touch either side until it’s all settled.
@hms,
just to clarify, once the journal happens and DLR.U shows up, you can sell that one immediately – no need to wait 3 days for settlement.
Just don’t touch the original DLR shares that still show in your account until everything flushes through.
@chris
Thanks – yeah, I meant the shares themselves, not the cash, but I wasn’t clear. I realized after I submitted and re-read my post it wasn’t clear, but unfortunately we can’t edit posts.
@CCP have you thought of adding a more full featured forum engine to this site for these post blog discussions?
@hms: I agree it would be nice to be able to edit comments after they’re posted, but I’m not aware of any WordPress site that allows this. That said, while the comments are an integral part of this blog, I don’t want to turn it into a forum, Canadian Money Forum and Financial Webring have that area well covered.
@chris and @brian
In RBC Direct, because you aren’t calling to journal, you will never have the DLR.U units listed in your account to sell (assuming the DLR/DLR.U move works the same as an interlisted stock). The account shows +shares on one side and -shares on the other till the settlement date . . . using my Potash move as an example:
When I bought POT on TSX and then immediately sold POT on NYSE, my account showed (using 100 as an example) 100 POT on the CAD/TSX side and -100 POT on the USD/NYSE side for 3 days. I also had the US cash on the US side immediately after the USD POT sale, and of course the cash for the TSX POT purchase was gone from the CAD side (as Chris pointed out). After 3 days the -100 and +100 POT both went to zero, and a “JNL” entry showed up in the “Activity” tab of the account showing the automated move of POT from the CAD side to the USD side by RBC. (The piece that lets RBC Direct users skip the phone call).
If it no longer shows this way or the DLR/DLR.U move shows on the account differently, Justin or someone else who has done it in RBC Direct more recently (I did it fall of 2012) can correct me :)
Another note for RBC Direct users, if you qualify for discounted trading fees, those may also show up incorrectly until both trades settle, and the discount applied then (i.e. the dollar values on both sides of the account may change slightly by the discount amount on the settlement date). I’ve had it show up sooner, or not show up at all if it’s the first trade after meeting the qualifications for discounted trading fees – you may have to phone them to have it applied.
@CCP and others. Canadian Capitalist in his blog posting mentions that you’ve “locked in” the exchange rate when using NG with DLR:
http://www.canadiancapitalist.com/a-foolproof-method-to-convert-canadian-dollars-into-us-dollars/
If you scroll down to CC’s June 7th, 2012 in the comment section he explains the concept.
To paraphrase the extensive discussion: DLR.U’s USD unit value is relatively fixed (it will slowly drop with time but that’s another discussion) and if you track the unit values of DLR.U you will see that is the case. As you say, the underlying instruments are US denominated. DLR, being priced in CAD, is what fluctuates. Once you’ve completed your purchase of DLR, you’ve already bought a fixed number of units in USD. It doesn’t matter what happens to the CAD:USD forex rate afterwards – you still have the same amount of USD — it’s just worth a different amount in CAD.
Note that using NG in reverse with DLR (USD–>CAD) does expose you to currency risk.
I’ll admit that I still have some trouble conceptualizing this but I encourage you to read the discussion on CC’s blog post (perhaps focusing on CC’s posts) to gain a better understanding. Despite the relative inefficiency of using NG with DLR vs. a stock with higher price, this protection from currency risk makes using DLR worthwhile when the journaling process is slow.
Perhaps a simpler way to think about when exchange rate risk applies when using DLR/DLR.U is to think of 1 unit of DLR/DLR.U as being equivalent to paper money – a crisp American $10 bill. (In reality, DLR is equal to about US$9.97, but the principle is the same.)
When you buy DLR, you pay the going exchange rate. Once you own a unit of DLR, you own an American $10 bill. When you convert DLR to DLR.U, it’s still the same bill, and it’s still worth US$10. The only difference is that, in essence, you have moved the $10 bill to the United States so you can spend it there. The Canadian/American exchange rate no longer affects you; your unit of DLR/DLR.U is always worth US$10.
Now, going in the opposite direction, when you buy one unit of DLR.U, you are again buying an American $10 bill. When you convert DLR.U to DLR, you are, in essence, bringing your American $10 bill into Canada. The bill doesn’t change, just its location. When you sell your unit of DLR, you are selling your American $10 bill, and the amount you get for it will be the prevailing exchange rate. (Today, you would have got C$10.39 for it.)
So, in the Canada-to-US direction, the exchange rate that matters is when you buy DLR (at the beginning of the Norbert Gambit). In the US-to-Canada direction, the exchange rate that matters is when you sell DLR (at the end of the NG).
There is some exchange rate risk in the US-to-Canada direction if it takes several days for DLR.U to be journaled across to the Canadian side. However, doing Norbert Gambit on Monday with a three-day wait is exactly the same, in terms of exchange rate risk, as doing it instantly on Thursday. Ultimately, that’s not going to make or break your investment strategy.
My experience using Questrade has been excellent since I talked to a very helpful person at the trade desk. I was requesting that my DLR shares be journaled to DLR.U and they asked if I wanted to sell them immediately afterward. I said yes, and then they advised me to just call the trade desk and not even mention any sort of journaling.
The last few times I’ve called the conversation goes something like this:
Me: “Hello, I have an interlisted stock and I would like to sell the USD version”
QT: “Oh, is it DLR.U?”
Me: “You got it. Please sell all xxx shares at market, but can you confirm the commission rate first?”
QT: “No problem, we can execute the market sell for xxx shares of DLR.U for $9.xx – there will be no trade desk commission since this is not a trade you have the ability to perform yourself via the IQ interface.”
Me: “Perfect, please execute it.”
QT: “All done, thanks for calling!”
Granted, the last time I did this was about a month ago, but ever since I stopped mentioning the word ‘journaling’ and just call the trade desk asking to sell DLR.U everything has gone super smoothly – I always confirm the commission and they always know that it’s the < $10 rate rather than the added fee normally charged by the trade desk.
I have confirmed with my statements after the fact that no fees other than the standard $5-10 commission are charged.
Retail banking in Canada fails the public once again. If el cheapo online brokerages like Questrade can have USD in RRSP, why can’t CBIC do it?
I used to be with TDWH, and was generally happy with their services. But their lack of USD RRSP forced to move to a more modern brokerage.
I consider a USD RRSP account to be a requirement now.
I just tried doing this with RBCDI and DLR/DLR.U (with their on-line practice account) and while the buying part was easy, when I tried to sell I got this message:
“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.”
I was selling DLR.U on the CDN market from my USD RRSP (I double checked) so I called them to see what the problem was. The rep on the phone was confused as to why this wasn’t working. He said the computers don’t seem to be set up for DLR.U and I would have to make a phone call to sell it…but I wouldn’t incur any additional trading charges by speaking to a broker because the on-line account isn’t working as expected.
I tried it again using RY…buying CDN and selling US and it worked like a charm, except that the stock fluctuated a bit during the 40 seconds it takes to do all this. To be honest I’m not sure if the stock price fluctuation (both on US and CDN side) helped or hurt my cause.
Are there other US Dollar Currency ETF’s well suited to doing Norbert’s that I should try?
@Anthony: There are no other ETFs like DLR/DLR.U, so that’s your only option unless you’re prepared to take that small risk of stock price fluctuation. We’ve done this dozens of times at RBC, so I don’t know what the problem was. It’s possible they won’t let you do it in a practice account.
Tried it with RBC DI and DLR/DLR.U this week. Everything worked out perfectly and no phone call needed. Everything settled three days later including the US based ETF I immediately purchased with the proceeds from selling DLR.U.
Only weird thing is that after you sell DLR.U on the us side of the account, it still shows the sale as DLR even though DLR.U was specified, but everything worked out wonderfully.
Just wanted to clarify something @Chris said about BMO InvestorLine
He mentioned “there is a “US Side” and a “Canadian Side” of each account…. It’s also impossible to tell from their website which stocks are on which side.”
I’m not sure exactly what he meant, but if you want to see how your portfolio is set up, when you’re in My Portfolio, looking at Holdings, you have to select “Asset Class & Settlement Currency” from the Categorize By drop-down list and click on the Go button. Then it will report a list of your Canadian Side holdings and a separate list of your US Side holdings. Luckily they’ve finally made the Categorize By settings sticky at least on your usual computer. (I presume they’re using a Cookie or something.)
Cheers.
Every discussion I read about a Norbert’s Gambit is concerned with large amounts of cash. What if you only want to convert smaller amounts? I have performed several Gambits with Questrade for larger sums, but plan on putting biweekly contributions to my RRSP account and once a month do a Gambit to buy more $US ETFs. Is it worth the hassle? Is is easier just to buy the ETFs directly and pay the 2% commission fee? It seems like a lot of work for little savings until you look at it over the long haul. I want to pay myself, but I don’t want to have my monies sitting doing nothing until I have a larger sum and then do a Gambit. Any advice would be greatly appreciated.
@Mike: Norbert’s gambit doesn’t make a lot of sense for small amounts. Doing it every month does indeed sound like a lot of unnecessary work, and don’t forget that you will still pay a commission on the sale of DLR or DLR.U at Questrade. That will wipe out your savings on small trades anyway. It’s almost certainly better to use Canadian-listed ETFs for your regular contributions and perhaps make one large conversion every year when you rebalance.
Hi,
Just tried Norbert’s Gambit using my Questrade account and it worked for me. The only difference in my experience is when I phoned the trading desk to have the shares journalled over they sent me to customer service. Customer service had them journalled over in a day and I was able to sell them using the web interface. No problems at all.
Hey Tim,
I have done two Norbert’s Gambits in the last month and was also sent over to Customer Service by the trading desk. Unlike you, however, it took almost a week both times to have it journalled. How did you ask them to do it?
Opening an RBC-DI acct right now to try this.
Do I need a MARGIN acct? or a CASH one would do?
Thanks all for help provided in previous comments.