HSBC InvestDirect & Norbert’s Gambit

On the non-registered front, you can have a USD account and a CAD account. So I am not sure if you can use Norbert's Gambit because I am not sure they will allow you to hold USD in the CAD account (or CAD in the USD account). So I use Knightsbridge or another currency converting service to get USD and deposit such USD into the USD account.

However, I don't think they have USD-denominated account for RRSPs . Not familiar with the term "wash rate form". However, what I know you can do is let's say you bought shares on NYSE/NASDAQ in your registered account which is denominated in CAD. You can complete a form that would not convert your currency back to CAD when you sell these USD stocks. They get put in a mutual fund. And when you want to buy USD, you can first use the funds there.

melodymelody wrote: ↑On the non-registered front, you can have a USD account and a CAD account. So I am not sure if you can use Norbert's Gambit because I am not sure they will allow you to hold USD in the CAD account (or CAD in the USD account). So I use Knightsbridge or another currency converting service to get USD and deposit such USD into the USD account.

However, I don't think they have USD-denominated account for RRSPs . Not familiar with the term "wash rate form". However, what I know you can do is let's say you bought shares on NYSE/NASDAQ in your registered account which is denominated in CAD. You can complete a form that would not convert your currency back to CAD when you sell these USD stocks. They get put in a mutual fund. And when you want to buy USD, you can first use the funds there.

Oh shoot, you’re right! I recall the non-registered accounts were separated into a USD and CAD account, so I’m under the impression NG’s are not possible on HSBC’s InvestDirect platform. Is that fair to say?

r3ddrag0nx wrote: ↑ Oh shoot, you’re right! I recall the non-registered accounts were separated into a USD and CAD account, so I’m under the impression NG’s are not possible on HSBC’s InvestDirect platform. Is that fair to say?

It is possible, but done somewhat differently with HSBC when in your RRSP.
You have to sign a form and basically select a CAD-USD type ETF. Once you do, what happens is that whenever you sell a US stock, the proceeds get put into the ETF instead of back to your cash account. Then when you buy US stocks, funds get drawn from this ETF first before using your cash reserves.

Therefore, it works to avoid converting USD to CAD and back and saves you on conversion fees. There is a downside: transactions to the monetary ETF take 3 business days so your balance temporarily looks wrong whenever you make a transaction. For example, if you just made a sale, temporarily you will have it in cash, but then 3 days later, the cash gets re-adjusted and the amount is added to the ETF instead.

If you're ok with this approach, then it works quite well.

RockstarLeo wrote: ↑ It is possible, but done somewhat differently with HSBC when in your RRSP.
You have to sign a form and basically select a CAD-USD type ETF. Once you do, what happens is that whenever you sell a US stock, the proceeds get put into the ETF instead of back to your cash account. Then when you buy US stocks, funds get drawn from this ETF first before using your cash reserves.

Therefore, it works to avoid converting USD to CAD and back and saves you on conversion fees. There is a downside: transactions to the monetary ETF take 3 business days so your balance temporarily looks wrong whenever you make a transaction. For example, if you just made a sale, temporarily you will have it in cash, but then 3 days later, the cash gets re-adjusted and the amount is added to the ETF instead.

If you're ok with this approach, then it works quite well.

Is this specifically for registered accounts only (ie. TFSAs, RRSPs, etc)? How do we go about doing something similar in non-registered (taxable) accounts?

r3ddrag0nx wrote: ↑ Is this specifically for registered accounts only (ie. TFSAs, RRSPs, etc)? How do we go about doing something similar in non-registered (taxable) accounts?

Not sure, all I know is you can do it with a registered account.

I would think for a non-registered account, the best would be to have a separate account in USD so no gambit is needed.

RockstarLeo wrote: ↑ Not sure, all I know is you can do it with a registered account.

I would think for a non-registered account, the best would be to have a separate account in USD so no gambit is needed.

What’s the best way to fund the non-registered USD account then without incurring hefty conversion exchange fees, etc?

I am using TD non registered C$ and US$ accounts. What I do is the standard Norton’s Gambit procedure, buy DLR (Horizons ETF) in C$ in the C$ account, wait 1 or 2 days for purchase to complete (TD might take only 1 day), transfer or journal the DLR units to my US$ account (this completes in a few seconds), then sell the units as DLR.U for US$ in the US$ account which may take another day or 2 to complete.

Use the reverse procedure to go from US$ account to C$ account. Buy DLR.U in the US$ account, transfer the DLR units to C$ account and there sell the DLR units for C$.

In both cases the cost is 2 commissions (2 x 9.99 at TD) and a tiny amount of exchange rate loss. The conversion would cost about 1.4% at TD if Norton’s Gambit was not used. I recently converted C$40,000 so I saved C$560.

adams7 wrote: ↑ Norton’s Gambit…
Norton’s Gambit.

It’s Norbert’s Gambit, so named due to its initiator Norbert Schlenker.

adams7 wrote: ↑ I am using TD non registered C$ and US$ accounts. What I do is the standard Norton’s Gambit procedure, buy DLR (Horizons ETF) in C$ in the C$ account, wait 1 or 2 days for purchase to complete (TD might take only 1 day), transfer or journal the DLR units to my US$ account (this completes in a few seconds), then sell the units as DLR.U for US$ in the US$ account which may take another day or 2 to complete.

Use the reverse procedure to go from US$ account to C$ account. Buy DLR.U in the US$ account, transfer the DLR units to C$ account and there sell the DLR units for C$.

In both cases the cost is 2 commissions (2 x 9.99 at TD) and a tiny amount of exchange rate loss.

This is what I do as well. I think you have to call in by phone to do the journalling, which is generally smooth if you are a Premier member, but took an unexpectedly long time during market turmoil during COVID.

It is a slower process than some other institutions, since you need to wait for the purchase to complete prior to journalling. This means DLR/DLR.U is the best choice, since while its bid-ask spread may be more (and the liquidity less) than interlisted company stocks like RBC, you are not exposed to stock market risks during the holding period.

Be careful about trading volumes on DLR.U. It can be quite thin; I just looked, today's volume was 298k shares, so about $3 million worth. That's all fine if you're converting some tens of thousands of dollars, but I'd be careful about a snowbird property purchase in the 7 digits. A market order might not be a good idea.

houska wrote: ↑ This is what I do as well. I think you have to call in by phone to do the journalling, which is generally smooth if you are a Premier member, but took an unexpectedly long time during market turmoil during COVID.

It is a slower process than some other institutions, since you need to wait for the purchase to complete prior to journalling. This means DLR/DLR.U is the best choice, since while its bid-ask spread may be more (and the liquidity less) than interlisted company stocks like RBC, you are not exposed to stock market risks during the holding period.

Be careful about trading volumes on DLR.U. It can be quite thin; I just looked, today's volume was 298k shares, so about $3 million worth. That's all fine if you're converting some tens of thousands of dollars, but I'd be careful about a snowbird property purchase in the 7 digits. A market order might not be a good idea.

Apparently the journal also has to settle, so you’re waiting for the transfers to your account, waiting for the settlement of the shares you purchased, waiting for the journaling, and then waiting again to settle the sale in the other currency, I’m guessing, lol.

r3ddrag0nx wrote: ↑ Apparently the journal also has to settle, so you’re waiting for the transfers to your account, waiting for the settlement of the shares you purchased, waiting for the journaling, and then waiting again to settle the sale in the other currency, I’m guessing, lol.

Sounds about right.

It's clear a) you can do Norbert with InvestDirect, b) it's nowhere near as smooth as with some other brokerages.

It doesn't bother me. I periodically have amounts to convert, don't try to time to currency markets, and have little urgency. I'm just happy to save the banks' conversion spreads. But it's not a good platform for Norbert for those in a hurry!

This is in line with my impression of Invest Direct in general: it gets things done, but it's slow, inflexible, and dinosaurish compared to competitive offerings. As a buy'n'hold ETF investor who values the banking benefits HSBC Premier brings (as a result of my Invest Direct account) more than trading bells and whistles I can get by without, it's a good choice, but it's not the right choice for everyone.

houska wrote: ↑ Sounds about right.

It's clear a) you can do Norbert with InvestDirect, b) it's nowhere near as smooth as with some other brokerages.

It doesn't bother me. I periodically have amounts to convert, don't try to time to currency markets, and have little urgency. I'm just happy to save the banks' conversion spreads. But it's not a good platform for Norbert for those in a hurry!

This is in line with my impression of Invest Direct in general: it gets things done, but it's slow, inflexible, and dinosaurish compared to competitive offerings. As a buy'n'hold ETF investor who values the banking benefits HSBC Premier brings (as a result of my Invest Direct account) more than trading bells and whistles I can get by without, it's a good choice, but it's not the right choice for everyone.

I'm also a long-time user of HSBC and InvestDirect and I fully approve of this description.

Just did another Norbert's Gambit conversion with HSBC/Investdirect. The following seems to be how to do it most time-efficiently. You will get your C$ 5 trading days after you initiate. (This is for U$ -> C$, reverse as needed of course)

0. Prior to starting, make sure you have a US$ and C$ trading account with InvestDirect, and that they are linked to your U$ and C$ bank accounts at HSBC (I'm assuming this is where you have your U$ and want your $ to end up, respectively). And choose a week when there are no US or Canadian holidays.

1. On the first day, buy the right number of units of DLR.U ETF in your U$ trading account, choosing as settlement terms "from your linked USD bank account". Do this during trading hours, 9:30-4pm.

2. On the 3rd day, call in to InvestDirect and ask to journal over all your holdings of DLR.U in your U$ trading account to your C$ trading account. The phone call should only take seconds, and you will be told the journaling will be reflected in your account "by the next day". You need to wait to the 3rd day due to T+2 clearing, but you don't need to watch the time.

3. On the 4th day, you should see all the units in your C$ trading account (as DLR). Sell them anytime during trading hours, choosing as settlement terms "linked bank account"

4. On the 6th day (T+2 again), you should see the money in your C$ account.


It seems that with HSBC/InvestDirect, you do need to phone in to do the journalling, and you can only do it once the initial trade has settled. But the bank account linking does save a couple of days waiting for funds to move around. By using DLR as opposed to a cross-listed security like RBC, you lessen your exposure to market risk, but your trading costs (spread) will be a bit lower.

Just use IB, why brother with HSBC

1000islands wrote: ↑ Just use IB, why brother with HSBC

HSBC is not bad. There are benefits especially if you hold $1 million in assets.

I am currently working towards that myself.

xgbsSS wrote: ↑ HSBC is not bad. There are benefits especially if you hold $1 million in assets.

I am currently working towards that myself.

Different people having different investment plans have different needs.

Not evreyone invests heavily in US stocks in which case NG is not really a concern. In any event, with HSBC's separating USD and CAD accounts, when I trade US stocks, I just transferred USD in after exchanging it e.g. at Knightsbridge. In any event, I have to agree with @xgbSSS - HSBC is not bad especially if you are >$1m in assets. I know a lot of people will laugh when they say that, but their customer service, especially at the Jade/premier level, is very good.

xgbsSS wrote: ↑ HSBC is not bad. There are benefits especially if you hold $1 million in assets.

I am currently working towards that myself.

drug laundering and could turn you in simply because of a PowerPoint presentation you gave.

I watched Netflix's "dirty money". I wouldn't put my 1 million there if if I have.

melodymelody wrote: ↑ Different people having different investment plans have different needs.

Not evreyone invests heavily in US stocks in which case NG is not really a concern. In any event, with HSBC's separating USD and CAD accounts, when I trade US stocks, I just transferred USD in after exchanging it e.g. at Knightsbridge. In any event, I have to agree with @xgbSSS - HSBC is not bad especially if you are >$1m in assets. I know a lot of people will laugh when they say that, but their customer service, especially at the Jade/premier level, is very good.

What is the benefit at premier level? Honest question. all I keep hearing is horror stories. And they few encounters I had with them HSBC basic CS seemed incompetent.

1000islands wrote: ↑ drug laundering and could turn you in simply because of a PowerPoint presentation you gave.

I watched Netflix's "dirty money". I wouldn't put my 1 million there if if I have.

And I'm sure you vetted every company you have purchased goods or services from , or you own in investments and have taken them out or made shareholder actions based on their activities,
/s