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HELP! Negative balance in my TFSA

  • Last Updated:
  • Nov 30th, 2020 8:42 am
[OP]
Member
Jan 5, 2015
278 posts
415 upvotes
Toronto, ON

HELP! Negative balance in my TFSA

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So I screwed up with settlement dates (differences between options and shares) and ended up with a negative balance in my TFSA. I basically got margin called by Scotia iTrade today.

No problem. I put in CAD$5500 to cover it until the cash settles.
Uh, but is this okay? The US and CAD side of my TFSA are still considered as one account and not two separate accounts right? I really don't want to wake up to a force liquidation on Monday. I don't want to eat up an exchange rate fee just to move it over to the USD side until the cash settles. The red number in my TFSA is scaring me.

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I can't even contact Scotia iTrade right now because it's the weekend. AAAAAAAAAAAAAAAAAAAAAAAA
6 replies
Banned
Sep 14, 2020
437 posts
247 upvotes
If you deposit funds to cover the negative balance, make sure you are within your deposit limit of $5500 for the year + the spare space you had from beginning of the year.

This is a tough situation.
[OP]
Member
Jan 5, 2015
278 posts
415 upvotes
Toronto, ON
Me262A1 wrote: If you deposit funds to cover the negative balance, make sure you are within your deposit limit of $5500 for the year + the spare space you had from beginning of the year.

This is a tough situation.
I'm fine with the contribution limit. I'm just concerned whether this still counts as a negative balance because it's on the USD side. Like I'll definitely call on Monday to clarify but damn I don't wanna sell any of my positions. I'll transfer it over to the USD side if I have to without doing Norbert's gambit if I really have to. I just don't want them to liquidate my positions at market price (ugh), I just need some time.

Like the sales settlement date is on Nov 30, so maybe I'll be fine since it'll be settled before the market even opens?
Deal Addict
User avatar
Dec 16, 2015
3472 posts
3117 upvotes
Toronto
What would be ur net market value if they liquidate it automatically?
To the moon
[OP]
Member
Jan 5, 2015
278 posts
415 upvotes
Toronto, ON
Redsanta wrote: What would be ur net market value if they liquidate it automatically?
It would still be positive (like even Scotia iTrade still acknowledges I have US$123.19 of buying power left). It only turned negative because cash from a sale hasn't settled yet. I purchased some calls with the shares I sold (to hedge for further profits) then I used the remaining cash to buy shares. The settlement date on the transaction for calls was a day earlier than the shares sale, and that seems to be where I got screwed.

I've never had trouble selling shares and immediately buying something else the same day with Scotia iTrade before. I thought free-riding was only when I take that one step further (like immediately selling the shares I just bought)
Member
Nov 17, 2016
205 posts
169 upvotes
aronpm wrote: It would still be positive (like even Scotia iTrade still acknowledges I have US$123.19 of buying power left). It only turned negative because cash from a sale hasn't settled yet. I purchased some calls with the shares I sold (to hedge for further profits) then I used the remaining cash to buy shares. The settlement date on the transaction for calls was a day earlier than the shares sale, and that seems to be where I got screwed.

I've never had trouble selling shares and immediately buying something else the same day with Scotia iTrade before. I thought free-riding was only when I take that one step further (like immediately selling the shares I just bought)
You can buy or sell shares an unlimited amount of times in a day as long as your cash balance is positive on the settlement date.

If you have $0 cash balance on Monday and you buy a $1000 stock you better put the money in the account by Wednesday or you will get charged 22%/year interest on the balance. If you sell $1000 of shares on Monday you don't have to deposit anything. If you sell $1000 on Tuesday or Wednesday you still have to deposit the $1000.

Free-riding and similar restrictions are only a concern with US based brokerages as far as I know
[OP]
Member
Jan 5, 2015
278 posts
415 upvotes
Toronto, ON
StevePos wrote: You can buy or sell shares an unlimited amount of times in a day as long as your cash balance is positive on the settlement date.

If you have $0 cash balance on Monday and you buy a $1000 stock you better put the money in the account by Wednesday or you will get charged 22%/year interest on the balance. If you sell $1000 of shares on Monday you don't have to deposit anything. If you sell $1000 on Tuesday or Wednesday you still have to deposit the $1000.

Free-riding and similar restrictions are only a concern with US based brokerages as far as I know
Yeah the problem is I sold some shares to leverage into calls. The settlement date on the calls were a day earlier (i'm a noob) so that's where I got ****. I've been on hold with Scotia iTrade for 40 minutes and I'm debating just withdrawing the CAD (not like I will max out my contribution limit this year) then depositing it to the USD side. I really don't want to be liquidated on my GME shares right now lol

~$70 mistake eating that exchange rate fee.. Then $10 through Norbert's Gambit to get it back as CAD

EDIT: finally reached an iTrade agent. I did have to eat the exchange rate fee and transfer it over to the USD side

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