Investing

Reverse Norbert's Gambit with RBC Direct Investing?

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  • Mar 3rd, 2018 4:50 am
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Sr. Member
Sep 24, 2010
917 posts
63 upvotes
Toronto
alanbrenton wrote:
Jun 3rd, 2015 3:03 am
So what was the right step to take?

Buy US listed shares in USD and just sell them in the CAD account?

Are there income tax repercussions, like a few pennies that need to be reported to the CRA?
Yes if it's a taxable account (i.e. not a rrsp resp or tfsa account) and there is a profit.
[OP]
Newbie
Jan 12, 2015
26 posts
2 upvotes
Lachine, QC
Looks like it was a success, and was about 0.00025 cents off of the flat rate when you factor in the ~$20 in commissions. Feels awful knowing how much I could have saved to date using this trick instead of XE trade or bank rates.
Deal Expert
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Apr 21, 2004
45176 posts
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garybusey wrote:
Jun 6th, 2015 6:34 pm
Looks like it was a success, and was about 0.00025 cents off of the flat rate when you factor in the ~$20 in commissions. Feels awful knowing how much I could have saved to date using this trick instead of XE trade or bank rates.
Good morning Gary. Could you provide step by step the process you took including CAD or USD accounts involved and if this was done online without help from a RBC DI representative.

I had CAD and bought US listed securities so I was charged somewhere between 1.0 to 1.3% which isn't so bad compared to conversion between RBC CAD and USD chequing accounts.

Thanks so much.
Member
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Jan 23, 2011
430 posts
97 upvotes
Montreal
The last time I did this was last December. I bought 200 TD shares @55.65 CAD in my BMOIL RSP account and sold them @48 USD the same day. All were done online, both entered as limited orders, with no telephone calls to BMOIL. The portfolio showed -200 TD and 200 TD shares but these were cleared after a few days. I have said this before. For people who want to attempt this, always call their broker first to see if this can be done on the same day as this was meant to be. Even if you've done it with your broker before, still do call to check, in case your broker changed the rules.
Deal Addict
May 15, 2013
1389 posts
251 upvotes
Montreal
So, people with recent experience an/or experts Winking Face

Using my US dollars investment account I bought today DLR.U shares (in the Canadian market of course). The order shows as filled. As my goal is to exchange USD to CAN, can I sell right now all my DLR shares to my CAN dollars investment account or do I need to wait 3 days?
Deal Addict
Jan 21, 2014
2989 posts
855 upvotes
I did it a few years back with CNQ (not DLR) and I could buy from US account and immediately sell from CDN account. At the end of the day, it zeroed out my position from both accounts so no need to wait for it to settle or journal. I have margin accounts with RBC DI BTW
Sr. Member
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Jan 15, 2015
517 posts
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iamthebest wrote:
Feb 7th, 2017 8:51 pm
So, people with recent experience an/or experts Winking Face

Using my US dollars investment account I bought today DLR.U shares (in the Canadian market of course). The order shows as filled. As my goal is to exchange USD to CAN, can I sell right now all my DLR shares to my CAN dollars investment account or do I need to wait 3 days?
You should be able to buy and sell on the same day to lock in rates. See long thread on this topic for more info: Old RFD post...
Deal Addict
May 15, 2013
1389 posts
251 upvotes
Montreal
mkl38s wrote:
Feb 8th, 2017 4:48 am
I did it a few years back with CNQ (not DLR) and I could buy from US account and immediately sell from CDN account. At the end of the day, it zeroed out my position from both accounts so no need to wait for it to settle or journal. I have margin accounts with RBC DI BTW
Thanks, I have a cash account, not margin.
SAM3674 wrote:
Feb 8th, 2017 12:44 pm

You should be able to buy and sell on the same day to lock in rates. See long thread on this topic for more info: Old RFD post...
Thanks.

Yeah, I had already read that thread before doing the transaction and before posting here. Unfortunately, almost 99% available information for Norbert's Gambit is from $CAN to $USD.
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Jun 19, 2009
4890 posts
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Scarborough
mr_raider wrote:
May 4th, 2015 3:10 pm
Yup. That's how it works. I've never done it in the opposite direction, but I see no mathematical reason why it should be worse one way or another. Maybe someone can enlighten me as to why?
Because the price of DLR fluctuates, DLR.U does not (or very little). The reason why CAD -> USD works is when you buy DLR, the rate will be locked in (as your purchase price of DLR won't change after you buy it), but if you do the reverse and buy DLR.U to sell DLR, in 3 days when the journal settles, the price of DLR will most likely have changed from where it was 3 days ago.
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Aug 1, 2007
1342 posts
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SAM3674 wrote:
Feb 8th, 2017 12:44 pm
You should be able to buy and sell on the same day to lock in rates. See long thread on this topic for more info: Old RFD post...
Has anyone been told of any issues buying and then selling immediately the same day, regarding the shorting against the box rule?
Sr. Member
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Jan 15, 2015
517 posts
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cmackie wrote:
Feb 10th, 2017 8:02 am
Has anyone been told of any issues buying and then selling immediately the same day, regarding the shorting against the box rule?
To my understanding, selling short against the box means you don't actually close the position on stock that you own. With Norbert, you dispose of shares for cash and claim capital gains or losses, so the short selling does not defer taxes as contrary to SEC regulations.
Newbie
May 9, 2016
65 posts
20 upvotes
garybusey wrote:
May 3rd, 2015 6:31 pm
Does anyone have any experience in doing a USD -> CAD Norbert's Gambit with RBC Direct Investing?

As I understand it, it's not ideal to use DLR and DLR.U when going from USD to CAD, as your rate isn't locked in, and the journal takes several days to go through. On top of that, the dollar is all over the place lately.

I've never done the gambit before and as far as I've read, you can do near-instant gambits with RBC DI without waiting for days. The only downside is the need to pay 2x $10 commissions, which is still far better than the conversion rate for any significant amount of money.

Could anyone give me a rough rundown on how to do this USD -> CAD gambit with RBC DI and using stocks rather than ETF?

I've found a guide or two but they all talk about going from CAD to USD, using DLR and DLR.U.

Thanks!
Why would there be a difference using Norbert's gambit CAD -> USD vs USD -> CAD? There is no difference.
Jr. Member
Feb 3, 2013
129 posts
52 upvotes
GREENWOOD
Okay so this only applies to RBC DI as other brokerages require more steps but here is the definitive guide for USD->CAD:

Step 0.

MAKE SURE THAT THERE ARE NO HOLIDAYS ON EITHER MARKET IN THE NEXT 4 BUSINESS DAYS!
Trade at least 30 minutes after market open and before market close.
Remember that the trade commission is $9.95 in the currency of the trade. So it will actually cost $9.95 USD + $9.95 CDN to do this.
If doing this in a cash/margin account be aware of the superficial loss rule and the 60 day window.

Step 1.

Find an inter-listed security (same CUSIP on US and CDN exchanges) http://www.tmxmoney.com/en/research/interlisted.html I like the big 5 banks as they have low bid/ask spreads and high volume.

Note that the common ETF DLR/DLR.U are the same security (same CUSIP) but are not listed on different exchanges, DLR.U is listed in US funds on the TSX.

Step 2.

Go to place order screen and get ready to buy a security.
Select the account that the fund source is from. Each account has a USD and CAD sub account. Select USD side of account.
Select the market in which you want to buy on; the symbol might differ between exchanges or it may be the same. If using the Big 5 banks they are the same symbol on both exchanges select US; if buying DLR.U select CDN.
Put in a buy limit order for the security. Use the current ASK for the limit if you want the order to fill right away.
Wait for the order to say filled in the order status page.

Step 3.

Go to place order screen and get ready to sell a security.
Select the account for the funds to go into. In this case select the CAD side of account.
Select the market in which you want to sell on; In almost all cases select CDN [I can't think a security listed on a US exchange that trades in CAD].
Put in a sell limit order for the security. Use the current BID for the limit if you want the order to fill right away.
Wait for the order to say filled in the order status page.

Step 3.

Wait T+3 (so today + 3 days/4 days) and the securities will cancel each other out and you will have converted USD to CAD.
Jr. Member
Feb 3, 2013
129 posts
52 upvotes
GREENWOOD
SkimGuy wrote:
Feb 9th, 2017 12:49 pm
Because the price of DLR fluctuates, DLR.U does not (or very little). The reason why CAD -> USD works is when you buy DLR, the rate will be locked in (as your purchase price of DLR won't change after you buy it), but if you do the reverse and buy DLR.U to sell DLR, in 3 days when the journal settles, the price of DLR will most likely have changed from where it was 3 days ago.
RBC DI has no requirement to wait for a journal on interested stocks. Just buy then immediately sell. Not accounting for differing exchange holidays everything will work itself out on the settlement date.
Deal Addict
May 15, 2013
1389 posts
251 upvotes
Montreal
VanIsBest wrote:
Feb 10th, 2017 5:52 pm
Why would there be a difference using Norbert's gambit CAD -> USD vs USD -> CAD? There is no difference.
Read the whole 2 pages thread.

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