Personal Finance

Norbert's Gambit, RESP and USD at RBC Direct Investing, TD Waterhouse and Questrade

  • Last Updated:
  • Jun 25th, 2013 6:06 am
Tags:
None
[OP]
Deal Addict
Feb 17, 2007
3190 posts
198 upvotes

Norbert's Gambit, RESP and USD at RBC Direct Investing, TD Waterhouse and Questrade

Well, at least for the title, I haven't found a similar one; however, in the discussions, there might be some areas covered on these 3 discount brokers.

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).

Steps:
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?

For TDW
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).

For Questrade
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.

Conclusion:

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.
18 replies
Member
Feb 25, 2009
299 posts
7 upvotes
Mirabel
Im a buy-hold type investor for my SDRSP. Norbert's Gambit (NG) intimidates me, and I dont know how warm my broker is to this scheme.

Would the following attempt on National Bank Direct Brokerage (NBDB) work:

On my NBDB stock order web page, I have a choice to buy a stock on either the "Canadian" or "American" market. I looked up stock that trade over both TSX and NYSE, with volume over 1M, smallest bid-ask spread on both sides of the border, and found Royal Bank (RY-T and RY-N). Say I wanted to convert about $50KCAD inside my RSP account, can I simply place a limit order to buy say 1000 shares of RY-T (Canadian Market) that is close to the ask price, wait until the order gets executed, then the same day sell as much RY-N (American Market) with the cash from the previous trade? Can $USD be held inside registered RSP account? Do I need a NBDB US$ Cash account opened first?

I noticed I DONT have a $US account listed, but only these four: CDN$ Cash, RRSP, LIRA, TFSA.

Right now, I have assets in RRSP and LIRA only, and I want to swap my Index Mutual Funds with Vanguard Index ETF's.
[OP]
Deal Addict
Feb 17, 2007
3190 posts
198 upvotes
dcaron9999 wrote:
Mar 14th, 2011 12:25 am
Im a buy-hold type investor for my SDRSP. Norbert's Gambit (NG) intimidates me, and I dont know how warm my broker is to this scheme.

Would the following attempt on National Bank Direct Brokerage (NBDB) work:

On my NBDB stock order web page, I have a choice to buy a stock on either the "Canadian" or "American" market. I looked up stock that trade over both TSX and NYSE, with volume over 1M, smallest bid-ask spread on both sides of the border, and found Royal Bank (RY-T and RY-N). Say I wanted to convert about $50KCAD inside my RSP account, can I simply place a limit order to buy say 1000 shares of RY-T (Canadian Market) that is close to the ask price, wait until the order gets executed, then the same day sell as much RY-N (American Market) with the cash from the previous trade? Can $USD be held inside registered RSP account? Do I need a NBDB US$ Cash account opened first?

I noticed I DONT have a $US account listed, but only these four: CDN$ Cash, RRSP, LIRA, TFSA.

Right now, I have assets in RRSP and LIRA only, and I want to swap my Index Mutual Funds with Vanguard Index ETF's.

I do not know how NB Direct Broker works. Each broker has their own ways of dealing with things.
Try searching online to see if anyone did NG with NBDB.

Thing with Questrade and RBC DI is that when you open an registered account, you get both CAD and USD sub-accounts.
Member
Feb 25, 2009
299 posts
7 upvotes
Mirabel
RBC rocks with this dual currency in registered accounts ... http://www.rbcdirectinvesting.com/us-do ... index.html

I do all my banking @ National Bank ... :-(

Cant wait until other banks catch up ... Ive just finished opening my NBDB account and consolidating my assets, but haven't traded yet. Now, Im considering switching my SDRSP and SDLIRA to RBCDI, even if this will incur another hit on my credit report.
Deal Addict
User avatar
Sep 26, 2007
3960 posts
143 upvotes
SC
wow that's great to know, thanks
"We don't have a soul... We are a soul. We have a body." ~C.S Lewis
[OP]
Deal Addict
Feb 17, 2007
3190 posts
198 upvotes
xlfe wrote:
Mar 14th, 2011 12:46 am
wow that's great to know, thanks

Yeah sure, no problem. But no one pushed the thank button yet lol.
Deal Addict
Nov 15, 2010
1648 posts
209 upvotes
Has anyone tried it with BMO Investorline?
Deal Addict
User avatar
Nov 28, 2007
2177 posts
355 upvotes
Whitehorse, YT
eiad77 wrote:
Mar 14th, 2011 6:29 am
Has anyone tried it with BMO Investorline?

It cannot be any easier than using BMO IL - well, the only other broker I'm familiar with is TDW.

BMO IL have button choices on their order page to allow you to choose the market - CAN or USA - and currency - CAD or USD.

All the assets, regardless of which side of the border they originate, show in one account, whether stocks or currency. There is no need to phone anyone to move anything over. (The cash actually resides in CAD or USD accounts at BMO, the bank.)

My best pick of a stock for the gambit is Talisman (TLM) because it's $23 rather than $50, so you can exchange smaller amounts of currency and, more importantly, there is never ay gap between the bid and ask in either market. The ratio of the prices in TOR and NYC is always equal to the spot exchange rate. Check it out.
Sr. Member
Nov 22, 2010
642 posts
110 upvotes
Toronto
Marzipan wrote:
Mar 14th, 2011 10:12 am
It cannot be any easier than using BMO IL - well, the only other broker I'm familiar with is TDW.

BMO IL have button choices on their order page to allow you to choose the market - CAN or USA - and currency - CAD or USD.

Yes, it is very easy at BMO. But one thing you must always remember to do..... make sure your settlement currency is set to US Dollars when you sell it on the US market. The default selection is Canadian and it will get converted back to CDN (at their rates of course) if you don't select US.
Deal Addict
User avatar
Nov 28, 2007
2177 posts
355 upvotes
Whitehorse, YT
travelgeek wrote:
Mar 14th, 2011 10:38 am
Yes, it is very easy at BMO. But one thing you must always remember to do..... make sure your settlement currency is set to US Dollars when you sell it on the US market. The default selection is Canadian and it will get converted back to CDN (at their rates of course) if you don't select US.

Yes. We can get careless when quickly placing orders - especially the second part of the gambit. I wonder if travelgeek writes from experience.

PS.
But I want to sneak in this comment about the White people and spending thread that was hastily closed - because it bothers me. There is legitimate relevance between race and the topics discussed under personal finances and IMHO, the thread was progressing responsibly. One can and should be able to point to an ethnic trait without a programmed response to consider it racist.
Sr. Member
Nov 22, 2010
642 posts
110 upvotes
Toronto
Marzipan wrote:
Mar 14th, 2011 12:26 pm
I wonder if travelgeek writes from experience.

Nope, I caught it in time :)
Sr. Member
Feb 1, 2010
703 posts
73 upvotes
But at BMOIL there is a problem with RRSP as it doesn't allow USD, right? Do you need to phone and get it put in USD MF?
Member
Feb 25, 2009
299 posts
7 upvotes
Mirabel
quatchi wrote:
Mar 14th, 2011 7:43 pm
But at BMOIL there is a problem with RRSP as it doesn't allow USD, right?
I think that's the case. RBC brags about the first Canadian "big bank" providing this. I emailed National Bank today and included the RBC link with the USD RRSP offering. I asked whether they will eventually match this, while I decide if I will transfer my assets to RBCDI. I may stick with Canadian ETF's within National Bank Direct Brokerage. I simply want to switch my Index mutual funds to matching ETF's to reduce MER's, and maintain my RRSP+LIRA couch potato allocation. A mix of Claymore, iShares, and Vanguard would be ideal. But if I get lazy, I might just end up sticking with Claymore and iShares in SDRSP, with slighty higher MER.
Sr. Member
Feb 1, 2010
703 posts
73 upvotes
+1. I am gonna change my RSP to RBC soon if BMOIL doesn't change by the summer.
Member
Feb 25, 2009
299 posts
7 upvotes
Mirabel
Just received this reply from National Bank Direct Brokerage (NBDB) to my email, regarding the dual currency support from RBCDI.

"Mr. Caron, we have received your e-mail dated March 14 and would like to thank you for taking the time to write to us.

In response to your email, we wish to inform you that National Bank Direct Brokerage does plan to offer registered accounts in US dollars in the future. Please note however that we cannot confirm the date at which we will offer the new product.

Should you require other information, do not hesitate to write to us again at the following address : web.trad@bnc.ca or to call one of our representatives at (514) 866-6755 (Montreal area) or 1-800-363-3511 (elsewhere in North America). Choose option 2 from the main menu followed by option 3, Monday through Friday from 8:00 a.m. to 8:00 p.m EST.

We trust that you will find the above information helpful.

Regards,
× < >

Top