Norbert's Gambit, RESP and USD at RBC Direct Investing, TD Waterhouse and Questrade
Now why did I create this thread? Well, after moving away from Questrade and settled at RBC DI and TDW, I have discovered some of advantages and disadvantages between those 3 brokers.
Norbert's Gambit trick
RBC DI is the number one in doing this trick. No phone calls required, you could practically perform it in your sleep (not literally). The stocks they hold in your accounts (registered (excluding RESP and LIF) and non registered accounts) are centralized.
Meaning once you purchased the stocks from any exchange (US or Canada), you could sell them on any exchange (well, they got to be listed in both places of course).
1) If you have CAD in your account, select your CAD account and buy RY (for example)from TSX.
2) Once you got the stocks, sell on NYSE by selecting your USD account and sell RY on NYSE. You get your USD just like that.
This works on both registered and non registered accounts excluding those ones mentioned above. It is easy because you could direct your funds to be deposited anywhere you want, and you could direct your shares to be sold on any exchange you want. However, if you are really careless, you might opt to sell your CAD RY on NYSE and direct your proceeds to your CAD account. Then you should not be in the business of trading stocks, imagine you wanted to sell 1 million shares of PG, and you pressed 1b (1 billion shares), flash crash anyone?
1) Buy TD on TSX
2) Call TDW to book the entry over to NYSE side
3) Sell TD on NYSE
4) Call to get your funds settled into USD Money market fund
I believe this method is usable for Registered and non registered accounts (excluding those accounts mentioned above).
1) Buy something like POT on TSX
2) Short the same amount of POT shares on NYSE
3) Call or live chat or email them to get your TSX POT converted to NYSE POT
Obviously, this can only be done in a non registered account due to the shorting requirement.
After their risk department do the entry, you will see that you make a purchase of POT on the NYSE in your trading account COMMISSION FREE.
However, in the olden days, getting them to do the booking is easy; however, with the upgrade, I can barely get a hold to anyone that is willing to help me. However, if you do come across a more senor employee via live Chat such as Yang, or Felix, they will make sure that you get what you want. If you ended up with some newby, you mind as well try again.
I tried this in my registered accounts, and failed big time. The booking of the entry take hours, mostly days. So, if you bought POT on TSX, and you wait a few hours or days for them to convert it to NYSE POT, what will happen to your POT price? You get the picture.
I bought some MFC on NYSE when it was selling at $12.50 in my registered account. After a few months MFC went up to $17.50 under TSX. I told them to convert my shares of NYSE MFC to TSX MFC because the dividends I get automatically get converted to useless USD. They will take away your shares of NYSE MFC and purchase TSX MFC at $12.50 on the current day. And I show this transaction to my friends and they were like wth? The transaction shows my purchase price ($12.50), commission ($0), and the date (the date when MFC was trading around $17.50).
They told me that Questrade will correct this and your purchase will be invalid.
ahh, I sure miss the olden days when Questrade was the best even with a portfolio that is over 6 figures.
In terms of customer services, TDW is by far the best.
Every time I called them, they picked up the phone in less than a minute. Around 5 minutes for RBC during normal non busy seasons. During RRSP season, it took TDW round 5-10 minutes, but it took RBC 20 minutes or more.
If you are interested in a RESP account, I suggest you go with TDW (if your income is high), or Questrade if your income is low, do not go with RBC DI.
Due to government regulation, RESP accounts are not allowed to hold USD. Therefore, RBC DI is powerless in this area. Your trades will get automatically converted both ways and incurring heavy Forex.
TDW has a way to mitigate this problem. Once you sell USD security, you call in to book your proceeds into a USD Money market fund. The same way you would do using another other registered accounts.
Questrade will put your proceeds into a USD position (like the old way they used to do in 2009 in TFSA and RRSP). However, you will incur $5 fixed rate on the day you trade USD stocks on top of your normal commissions. Which is not much anyways. Another thing about Questrade is that you could apply for Additional Canada Education Savings Grant (CESG) for poor people, and Canada Learning Bonds (CLB) for ultra poor people. All brokers offers Basic CESG.
If you have some useless USD sitting around your bank accounts, and you wanted to contribute to your registered trading accounts here is what will happen at each broker.
1) RBC DI, obviously, you funds will be deposited into the correct USD account unless you choose not to.
2) For TDW, you must open up a non registered account, and deposit it into your USD account and buy something there. Then request a position transfer in kind t your registered account. You will incur capital gains but not capital losses.
3) As for Questrade, you must pull the fund via your PAD agreement at Questrade, which will take days or weeks. If you do a bill payment to Questrade, your bank will automatically convert your USD to CAD and take a bite out of your money around 2.5%, then send off CAD to your Questrade account.
Questrade remains as my old time favourite, it leaves memories as I depart from this firm as a client. Questrade had improved significantly over the years since I started investing with them up until the February major failure upgrade with their fancy interactive user interface and all (who needs it?).
Although it improved their myQuestrade website significantly in terms of features; however, those extra things are not sufficient and useless for the major stressful nights that had cost me. Because everyone were having problems, it clogged up their customer service lines. And even if you could get through to them, they couldn't do anything because their IT team are too busy fixing common problems caused by the upgrade.
RBC DI is now my favour except for RESP accounts.