[This post was updated in February 2015 to reflect recent changes at some brokerages.]
Norbert’s gambit remains the least expensive way to convert Canadian and US dollars at a discount brokerage. For investors looking to buy US-listed ETFs, learning this technique can save hundreds of dollars by sidestepping the wide currency spreads charged by brokerages.
With the 2013 launch of excellent unhedged foreign equity ETFs from Vanguard and iShares, there’s less of an incentive to use US-listed ETFs than there used to be. In fact, in a non-registered account or a TFSA it may not even be worth the added cost and inconvenience if the only difference is a few basis points of MER. But in an RRSP, there’s a significant benefit: using US-listed ETFs can dramatically reduce the impact of foreign withholding taxes, which can add an additional cost of 0.30% to 0.70% to US and international equity holdings.
The problem with learning to pulling off Norbert’s gambit, however, is that there’s no simple set of instructions that works at every brokerage. RBC Direct Investing and BMO InvestorLine both allow you to hold US dollars in registered accounts, but only RBC allows you to do Norbert’s gambit online: at BMO you need to pick up the phone. Scotia iTRADE doesn’t even allow Norbert’s gambit in an RRSP: instead, they offer a unique service that eliminates the retail spread on currency exchange for a flat fee.
As part of our DIY Investor Service, we helped clients do Norbert’s gambit at all of the big-bank brokerages. And for the last few months, Justin Bender and I have pulled that experience together and created a series of five white papers—one for each brokerage—with step-by-step instructions you can follow on your own. Each of the papers includes screenshots and detailed descriptions of each part of the process, all specific to each brokerage’s unique quirks:
Norbert’s Gambit: A better way to buy US dollars in an RBC Direct Investing RRSP
Norbert’s Gambit: A better way to buy US dollars in a BMO InvestorLine RRSP
Norbert’s Gambit: A better way to buy US dollars in a TD Direct Investing RRSP [Update: As of late 2014, TD Direct Investing allows investors to hold USD in registered accounts, which makes “automatic wash trades” no longer necessary. A TD representative discusses the new process here.]
Norbert’s Gambit: A better way to buy US dollars in a CIBC Investor’s Edge RRSP [Update: CIBC apparently now converts currency very close to the spot rate in RRSP accounts. However, they have not been forthcoming with the details: we recommend calling the brokerage before making a USD trade in your account.]
Norbert’s Gambit and US-Friendly RRSPs: A better way to buy US dollars at Scotia iTRADE
We’ve worked hard to make sure these papers are accurate and up to date, but we welcome your feedback. If you have had different experiences at any of the bank brokerages, please let us know and we’ll keep these resources up to date.
@Ron: Sounds like you have the basics down. You do not have to wait to call the broker after purchasing DLR: in fact, to apply FX netting you need to do it the same day. And no, you don’t have to apply FX netting separately for every trade: they will do it once for all trades done on the same day.
You may also find this helpful:
https://canadiancouchpotato.com/2013/07/09/norberts-gambit-at-cibc/
Hi,
I have tried today to execute the Gambit on RBC DI. In short I bought 1970 DLR (for approx 21K). I can see that the 70 part is filled and the 1900 part if partially filled.
Got a quote for DLR.U and tried to sell the 1970 and I get the following warning
“We have detected you are trying to sell a position in a different currency from which you currently hold it in. Please review your order to prevent a potential foreign exchange.”
Did I get this because my order was not fully filled and was trying to sell something I do not yet own or it is normal that I get this and I shoudl just go ahead with it?
I do not want to be hit with FX.
Please advise. Thank you
@DanM: I think you may be misunderstanding the “partiallly filled” message. Whenever you you place an “odd lot” order (one that is not a multiple of 100) the order gets filled this way: first they fill the order up to the highest multiple of 100, so in this case 1900. At this point the order is “partially filled.” Then they fill the remaining 70 shares and declare the order “filled.” All this happens in a split second, so your entire order has almost surely been filled.
RBC always gives that message about making sure you understand that your order will settle in a different currency when you sell DLR.U. This does not mean the investor will be hit with foreign exchange costs.
Thanks Dan, your guides are extremely helpful. I currently invest with BMO InvestorLine and have successfully made a number of Norbert’s Gambits to covert CAD to USD. Two questions
1) Historically, when calling the rep at BMO to ask to sell DLR.U, I have been charged 9.95 to do the trade. However, on the most recent transaction the rep told me that the 9.95 price was an exception and for any future phone orders I would be charged the full ~$45. Has anybody else encountered this, and/or got around it? I would gladly perform the trade myself online for 9.95 but it appears to not be possible.
2) I will be moving to the US to work shortly. I will still maintain my BMO IL account, but am planning to additionally open a discount brokerage acct in the US. Are you aware of any US discount brokerages that are amenable to performing Norbert’s Gambit? Also, are you aware of any discount brokers that are better set up for cross-border investing situations (i.e. ease of fund transfer, able to hold CAD and USD)?
Thanks very much!
@PJ777: Glad you found the guides helpful. The BMO issue bothers me, because I don’t see how you can charge someone for broker-assisted trading when you don;t offer an online alternative. I haven’t encountered that issue before, so I suspect you may have just spoken to an inexperienced rep. I would suggest asking to speak to someone else if you encounter this again.
Unfortunately I have no experience with US brokerages and can’t offer advice here. In general I think you may find it a lot harder in the US: I’m not even sure you would be able to trade in CAD or hold CAD in your brokerage account.
Thanks for the guide. I’m with itrade and recently did a trade where I calculated they charged almost 2.5% to convert, 2% higher than their own ‘estimated’ rate that comes up when you preview a quote. That is almost criminal.
My question is, I followed the PDF guide to use Norbit’s and exchange $10k. After I put in the request to journal my shares to my USD account they emailed me that it would be put through at the end of the third business day. Is this the best we can hope for in terms of turnaround time?
Thanks again
@Scott: Yes, it’s not uncommon for some brokerages to make you wait until after settlement to journal DLR to the other side. The good news this makes no difference to your currency exposure, since DLR and DLR.U both give you exposure to the US dollar. The situation is more of a concern if you’re doing Norbert’s gambit with a stock: then you would have to be exposed to the stock’s price movements for three days.
I commented on this thread earlier but forgot to mention this. At CIBC Investor’s Edge, they apparently only charge a 10 basis point currency spread in registered accounts. Quoting their email:
“At present, holdings in registered accounts are denominated in Canadian dollars only. We are considering making the necessary system changes to allow US currency in our registered accounts in the future, and the matter is still under review.
In the meantime, any US stocks purchased in your RRSP, as well as any US dividends received, will be converted to Canadian dollars. We do charge a spread on foreign exchange conversions, but the spread for registered accounts (10 basis points), such as an RRSP, is much lower than for non-registered accounts (150 basis points). The spread is built into the conversion rate used, and will not be charged as a separate fee. ”
I haven’t tried this myself so cannot confirm, but it would make Norbert’s Gambit fairly moot except for very large transactions. For example:
Buying $10,000 US stock directly: $6.95 + $10 FX fee = $16.95
– happens instantly
Converting $10,000 CAD to USD using Gambit, then buying US stock: $6.95 x 3 = $20.85
– requires calling them twice and being put on hold 5-30 minutes each time, and risking talking to an incompetent trader who doesn’t understand what you’re trying to do.
Gambit savings: None! It’s actually $3.90 more expensive
The numbers for $20,000:
Buy stocks directly: $6.95 + $20 = $26.95
Norbert’s Gambit: Still $20.85
Gambit savings: $6.10
The numbers for $50,000:
Buy stocks directly: $6.95 + $50 = $56.95
Norbert’s Gambit: Still $20.85
Gambit savings: $36.10
The numbers for $100,000:
Buy stocks directly: $6.95 + $100 = $106.95
Norbert’s Gambit: Still $20.85
Gambit savings: $86.10
Since we’re now talking about tens instead of hundreds of dollars savings by using the Gambit, I’ be much more inclined to buy US stocks directly than the hassle of dealing with traders over the phone. The convenience is worth it to me, even for large amounts.
This is assuming they really do charge 10 basis points. It seems like a pretty good deal.
Since a TFSA is also a registered account, it probably gets the 10 basis point currency spread too.
I’m surprised to hear that CIBC now charges such a low spread. When I called them with that question last year, I spent over an hour on the phone trying to get someone to just tell me what their spread was, and nobody would. They would only tell me what conversion rate they were specifically charging at that moment. So I back-calculated their spread by comparing their offered rate with the current exchange rates from xe.com, and the spread was very high. I want to say it was 2.5%, but I can’t actually remember.
In any event, it led to me transferring all of my money to BMO, where you can easily mix USD and CAD in your accounts, and it is very easy to perform Norbert’s Gambit online.
If CIBC is now only charging a 10 basis point spread, then your calculations seem reasonable. Don’t forget, though, that you also get charged the conversion fee (the full spread, including the 10 basis points) on all dividends that you receive on your American stocks. That’s because the dividend proceeds are automatically converted back to CAD. Then if you use those dividends to buy more American stocks, you get charged AGAIN to convert back to USD. None of that happens if you hold your American stocks in a true US dollar account.
@Brian: This is very interesting: someone else recently told be that CIBC was converting currency at close to the spot rate in RRSPs to compensate for the fact that they still don’t allow US in registered accounts. As you say, if this is true then Norbert’s gambit is not necessary, and perhaps even more expensive. (You haven’t even considered the bid-ask spread on DLR, which typically adds 0.20% to the cost of a gambit.) I’m going to follow up with CIBC and see if I can learn more. Thanks for the tip!
Would you recommend using Royal Bank instead of DLR as the bid/ask spread is a lot tighter in percentage terms and the liquidity is much better? I calculate that I can save 0.17% in transactions fees.
@Bill: Many people use an interlisted stock instead of DLR, and that’s fine if you’re comfortable with the risk. If you can do the buy and the sell within a minute or so it’s not usually a problem, though stocks can move in price quickly. At brokerages where you need to wait before journaling, that’s a very risky option.
So far, I’ve been doing the gambit with DLR. Does RBC still do automatic journaling if you buy RY on TSX and sell RY on NYSE? The difference being that it’s journaling between 2 stock exchanges instead of the same one (DLR and DLR.U are both listed on TSX)
Hi Brian S.
I have done this transaction with POT with BMO. They automatically journal the entries and you can buy and sell POT on-line. With DLR.U you have to call the desk and can’t trade on line.
The advantage of the trade is that the bid/ask is a smaller on POT because it is +$30 and even smaller on RY as it is +$60 while DRL is $10. The risk is that POT or RY will fall in the minute between when you buy and sell. I calculate that POT would have to fall about $0.30 before you would lose the advantage over DLR. I haven’t done this trade with RY yet because the liquidity on the NYSE is much less than POT. That is why I asked Dan about RY.
I did get caught on the ex-dividend date with POT. I accidentally bought it the day before the ex-dividend date and got credited (in US $) and then debited the dividend (CDN$) Not good as my T4 will show the POT dividend and I will be taxed and I cannot claim the reversal. (a quirk of our tax system). So the bottom line is to check the ex-dividend date and do not trade within a couple of weeks of it.
So is all this worth it? Maybe, if you are doing large sums. The big drawback of DLR is that it is relatively thinly traded and can’t handle large trades without big bid/ask spreads. If you are dealing with $50,000+, I would say take a look at it.
I hope this makes sense, as I am private investor and not an investment professional. So please be careful with my advice. Dan please correct me if I am leading folks astray.
@Bill and Brian: Everything Bill has written sounds accurate to me. Remember that BMO and RBC handle things differently, however. At RBC you can do an “ìnstant gambit” using DLR with no phone call, whereas you cannot do that at BMO. If you are using an interlisted stock, then an instant gambit is possible at both brokerages.
@Bill@Brian@CCP: I have a minor disagreement with one of Bill’s concerns, specifically the 2nd last paragraph. The worry about DLR’s being thinly traded leading to large bid/ask spreads during large trades seems to be unfounded in practice (the reason, to my novice understanding, is that the value of DLR’s shares is pegged directly to the value of the US Dollar compared to the Canadian Dollar, no matter how few shares are being traded at the time, so the spreads seem to be always kept low, about 2 cents). See the discussion in the last few comments of this article:
https://canadiancouchpotato.com/2012/09/10/etf-liquidity-and-trading-volume/
Of course, it still is prudent to put limit orders in place at the time of trading, just in case of unforeseen surprises.
@Oldie, there seems to be a lot of misunderstanding about bid/ask spreads and liquidity when it comes to ETFs. With a low trade volume ETF you are at the mercy of the market maker(s) (also known as the designated broker(s)). This means the market maker provides liquidity (a positive) but that liquidity comes at a cost because they also get to set the bid/ask spread as they see fit (a negative.)
With a high volume stock or ETF, all of the market participants together determine the bid/ask spread. In fact, high frequency traders, whom the media seems to hate ensure the spread is very, very small. This is why the bid/ask spread of a high volume stock like POT will generally always be lower than the bid/ask spread of something like DLR. High frequency traders also ensure that the spread between an interlisted stock like POT is priced appropriately on the NYSE and TSX exchanges.
This is why I have a rule of never buying low volume ETFs… but that’s just me and it fits my strategy.
@Brian G: While your comments are valid regarding the high or at least volatile bid-ask spreads of thinly traded ETFs whose underlying component share value may not be readily evaluated on a rational basis other than supply and demand, my understanding is that DLR (and DLR.U) falls into a special category of its own. Because the value of DLR is pegged to the value of the US Dollar (as counted in Canadian Dollars, and in fact the CAD price of DLR is actually the same as the current price of USD$10.00), any significant drift of the bid or ask values away from the current CAD/USD exchange rate will be immediately exploited by the foreign exchange arbitrageurs, no matter how low the background trading volume of DLR/DLR.U is before the anomalies are introduced.
At least that is my understanding of how the moderating mechanism works. In my limited practical experience and from reading of other more knowledgable investors on this and other sites, this really seems to play out as described above, i.e. during DLR or DLR.U trades in amounts larger than the average daily trading volumes, the bid-ask spreads seem to stay in a very low and constant range, typically about 2 cents.
Hi Oldie: The practical issue is that for large transactions a two cents bid/ask spread on DLR at $10 is a lot higher percentage than 1 cent on $39 for Potash or $75 for Royal Bank. For small amounts you will get a 1 cent bid ask spread, but for large amounts you will need a larger spread. This can add up to significant coin.
For example, a two cent spread on DLR for the buy and sell transactions is 0.385% while a 1 cent spread on RY is 0.028%. On $100,000 that would be a saving of $357. If I was converting $10,000 you would probably pay a 1 cent bid ask spread and using POT or RY would not be worth it. As Brian says, the market makers will make you pay at least 2 cents if you want to convert large amounts of cash.
@Bill: I fully agree. My only issue was that for DLR the objection wasn’t the worry that the bid ask spread would widen; as you say, for conversion of $10k or less, DLR is simple, worry free and economical.
In agreement with the idea that for conversions of larger amounts you should chose an inter-listed stock with a high price per share, I would add that you should also look for a stock that had high trading volumes on BOTH stock exchanges. In this regard, I thought TD was better than POT or RY. Last year TD shares were trading at about $85, making the spread very low when calculated as a percentage, and I used TD then. The stock has since split, but still, at CAD$54 or so per share, it is worthy of serious consideration to use in Norbert’s Gambit. I used TD again in March this year for a large conversion, and again it went without a hitch.
Thanks Oldie: I will check out TD.
If you call the BMO InvestorLine broker to place the trade for the DLR.U you will be charged is $35 + 5cents/share with a minimum commission of $43. It is also not clear from the Investorline site whether this would be charged in US or Cdn $
@david: We have done Norbert’s gambit at BMO InvestorLine in the past and have never been charged $35 + 5 cents per share. Since they do not allow you to sell the security online they have no justification for charging you the phone-assisted commission. I would suggest asking to speak with another trader if you get that response.
Hi,
Want to make sure I got this right.
I trade with TD and I have 100K C$ in a non-registered account.
I also have a US trading account.
So, if I want to convert my 100K C$ to U$, I can buy 100K worth of TD stock on TSX and then sell the equivalent shares of TD on NYSE.
Do I have to call them before and ask for a automatic wash trading or that step is required only in a RRSP account?
Is this right?
Thanks
Mike
@Mike PQ: Wash trading is not necessary in a non-registered account because you are permitted to old cash in USD.
Sorry if this has been covered already, but I am wondering if you need to do all the steps at the same time. If I want to convert 20K in cash from my US account into my Canadian dollar account, can I just do that with DLR.U to DLR. Then sell DLR and wait the three days for the Canadian cash to appear before making my Canadian ETF buy? Or is there some reason that you need to make the buy at the same time?
I am using RBC Direct.
@Peter: At RBC you don’t need to do all steps at the same time, but you can, so why not? I’m not sure exactly how it works but they let you sell stocks you don’t have yet (trade hasn’t settled yet). Maybe it acts like a temporary margin account? Regardless, the gambit is seamless at RBC – start with USD and end up with canadian stock in 2 minutes
@Brian S: Thanks. That is what I thought. I guess I just want to see the actual cash converted and in the account first before committing to a new buy. Over cautious I suppose.
Hi, regarding the instructions for calling a trader to do the USD sale for scotiabank and BMO (eg step 5 for Scotia) — is that only for RRSP accounts? In other words, if my primary interest is in Norbert’s Gambit for converting US$ to CA$ in non-registered accounts, can I do all steps online, without calling a trader? If not… I am about to open a Scotia bank iTrade account and am wondering if I would be better off with RBC Direct investing…
A separate question: does anyone know about doing a Norbert’s Gambit at Disnat?
Finally, looking up DLR-U on Disnat or on Scotia’s trial iTrade account, I am seeing DIGITAL REALTY TRUST instead of HORIZONS US DOLLAR as I see for DLR-C. Am I doing something wrong??
Thanks for any and all advice
@Paula: At iTRADE you have to call them in order to buy or sell DLR.U. You can only enter an online order for DLR. Norbert’s gambit is unquestionably easier at RBC Direct.
I’m not sure why DLR.U isn’t showing up properly on your practice account, but I have heard the same thing happens on RBC practice accounts. That will clear up when you have a real active account.
Sorry, I have no experience with Disnat.
thanks!
Is that something special (needing to call for buy/sell) for DLR.U? If I do a gambit on TD or THI for example, would it work differently? (I seem to be able to buy THI online on my practice iTrade account without problem…)
@Paula: It’s only DLR.U that confuses the brokerages. That said, I don’t know whether you would have to call iTRADE to journal a stock like TD or THI. I have only done it with DLR/DLR.U.
thanks!
I figured out why I couldn’t find DLR.U, it’s because I was looking for DLR-U (i.e., DLR on US stock exchange), instead of DLR.U-C (i.e., DLR.U on Canadian stock exchange).
In case it’s of interest to anyone: I called Disnat, they can journal stocks (eg TD) between CAD and USD accounts; one needs to call them (can’t do it automatically) but the service is free. The person I spoke to was baffled however about switching from DLR-C and DLR.U-C; which doesn’t mean necessarily that SOMEONE there doesn’t know how to do it.
Hello,
I’ve used the Norbert’s Gambit strategy to convert CAD to USD in my RRSP to buy US ETFs through my broker, Questrade, but I was wondering if Norbert’s Gambit is the best strategy to use for converting USD to CAD?
The reason I ask is that I’ve finally decided to sell all the US stocks in my TSFA (given that US holdings are inefficient in a TSFA) and go Couch Potato full fledge. Therefore, I now have roughly $35 K US which I want to convert to CAD to purchase canadian ETFs to build my couch potato portfolio. What would be the best, most cost-efficient way to do so?
Thanks
@Martin: Norbert’s gambit works just as well when you go the other way from, from USD to CAD.
Just a heads up for people doing gambits at RBC. You end up with slightly less USD than you should, but it corrects itself in a few days so I guess it’s related to trade settlement.
For example, I just converted $52k CAD to USD using DLR/DLR.U, and after I was done buying stocks with the resulting USD, my USD balance was (and still is) -$548. Normally, the trading platform prevents you from buying more stocks than you have cash for, so the fact that it let me go negative indicates this is just a display error and nothing to worry about. But it’s quite unexpected!
The first time this happened to me a few months ago, I did my business of converting CAD to USD and buying US stocks, then noticed my USD balance was -$250. I thought I made a mistake in my calculations so I contributed $250 to bring me back to even, but a few days later the balance was $250, which reflects my latest contribution. The negative amount was just a temporary illusion.
I can’t find a pattern to how big the error is (I’ve seen it range from 1% to 4%), but it’s fairly small.
Long story short, no you probably didn’t make a mistake in the amount of shares to buy, it’s RBC’s trading platform acting a bit weird, so just give it a few days to fix itself.
@Brian S: I had the same thing happen to me. -58.00 showed up in my US account. I added the 58 and ended up with about +45 after a few days. Annoying. Best thing is to make the conversion and then wait for a day or two to be sure your numbers have been properly calculated.
My folks are looking to convert $300k USD inhertence to CAD. They are with CIBC… I told them to switch banks. Will RBC be the easiest for a big conversion with this method do you think?
Thanks
@Aaron: Yes, I would say that RBC Direct is the easiest place to do Norbert’s gambit, though I’m not sure it’s worth switching brokerages to make one transaction.
I’m ready to do my first gambit on an iTrade non-registered account. I bought some DLR today, and am happy to let it sit for a few days before completing the gambit, as I have locked in my US$ exchange rate.
I read the iTrade guide and see that I can journal them over, and understand that I should wait until settlement, which is no problem I guess, but I haven’t tried it so it might work now. Has anybody tried doing it right away?
In any case, I’ve read that you cannot sell DLR.U on-line, but I see that I can, in fact put in an order on the iTrade site (i.e. the bid and ask prices come up). Has something changed since the guide was written, or would the form refuse my trade, or enter it as a short and not match it up? I’m curious enough to maybe try it in a few days, and will let you know how it works without the phone call to iTrade.
Any info would be appreciated…
I did it using itrade, just followed the guide. You can put in the request to journal immediately, and you’ll get an email that it will take three days. Then after three days it will show up as DLR in your US account. You need to call and tell them to sell DLR.U, but they’ll do it without charging their call-in fee (they shouldn’t charge the fee but the argument is that it’s a trade you can’t make online, so you have no choice).
I wouldn’t try and sell using the website, you’ll probably end up with a short on the DLR.U or something.
Thanks Scott. I did the journal request today, and got the e-mail message you described.
I was confused by @CPP’s response to Paula above on July 9, which said:
At iTRADE you have to call them in order to buy or sell DLR.U. You can only enter an online order for DLR.
…. but it appears that the iTrade system will let you buy or sell DLR.U now, so I wondered if the PDF guide was out of date.
I’m still tempted to give it a try on-line once the shares are journalled. One needs to choose “Sell Short” in order to create a short position, and the “Sell” option won’t let you sell shares you don’t have, so I probably won’t be able to execute the trade anyways, but if I can, it is new good news for those that want to do Norbert’s Gambit on iTrade. I’ll let you know either way…
@Doug: I use iTrade myself and have never been able to execute an online trade for DLR.U. If this has changed please let me know.
Since I moved to CIBC Investor Edge, I don’t need any gambits, as they are doing all transactions (buys/sell/DRIPs etc) on BoC Spot rate (in registered accounts)
Can you elaborate on that GIBOR?
I’m with CIBC Inv Edge RRSP/RESP and I did the Gambit a few months ago and always need to phone in to ask them to apply FX NETTING after my US buy/sells for my portfolio adjustments.
@Ron: CIBC seems to be applying a more favourable exchange rate when making currency conversions in an RRSP compared with their rate in non-registered accounts. I called them to confirm this and they were frustratingly vague about it. They acknowledged the rate is better in RRSPs but would not say what the spread was. I doubt it is at the BoC spot rate, but it may be good enough to make Norbert’s gambit unnecessary.
@CCP: “I called them to confirm this and they were frustratingly vague about it. ”
Arrgh! Is there any way to obtain specificity about the rate relative to the spot rate? It seems unreasonable not to be able to get a straight answer upon which to base the decision whether or not to use Norbert’s Gambit.
(Another possibility is that whoever you talked to just doesn’t know, or even doesn’t understand the concept of the cost of conversion as being different from the the difference in the number of starting dollars in one currency, and the number of ending dollars in the other currency, a level of unsophistication that I found shockingly common, even among financial advisors of relatively advanced general knowledge, except for this one common blind spot!)
My main problem with the CIBC “spot rate conversion” is that no matter how good it is, since it’s a hidden fee it might change at any time and you wouldn’t know it. There’s no way to know in advance (they won’t even tell you if you ask). The best you could do is find out after the fact (i.e. after converting a large sum of money) that they went back to charging 3% again. And that’s if you’re anal about checking every transaction. They might raise their rate and you’d probably never know.
The lack of transparency is a big problem for me and that’s one of the reasons I moved my money out of CIBC.
Ron/CCP, I was doing gambit with FX netting couple of years ago and now I do sometimes (FX netting) because on some of my accounts I still have US MM (and yes, you have to call for it) …. but about year ago , I talked to rep who said that they have favourable rate for FX rate on registered accounts… I closely tracked CIBC FX rate comparing to BoC noon spot rate. And indeed! They applied FX rate that in some cases was better than BoC noot spot rate, I checked it for about 50 transactions, include buy, sell, dividend without DRIP and dividend with DRIP and FX rate I got was always very good, much better than I was getting in TDW (this is why I moved my last account from TDW to CIBC). You can search threads about it on canadianmoneyforum.com where I was giving exact numbers for FX rates I got (and several other guys who in CIBC confirmed that they get same preferable rate).
“The lack of transparency is a big problem for me and that’s one of the reasons I moved my money out of CIBC.” – there is lack of transparency in all discount brokerages, and yes , it’s probably that they can change it, but TDW charges you ridiculously high FX rate already and don;t have any plans to reduce it (I talked to couple of managers there before transfering out my RRSP to CIBC). In any case , I back tested my FX rates with CIBC 3.5 years back and always (100%) I got much better rate than TDW. Considering very low trading fees 6.95, paying one 1 fees for trading same security same date multiple times and very good interface – imho CIBC is the best discount brokerage in Canada