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Negative in CASH from my RRSP account investment portfolio?

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  • Jun 30th, 2016 10:31 pm
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[OP]
Newbie
Sep 9, 2008
92 posts
7 upvotes
Toronto

Negative in CASH from my RRSP account investment portfolio?

I am using one of the Big 5 Bank to invest from my RRSP. Due to some privacy and before things get resolve, I do not want to disclose which one.

I transferred all my RRSP and start to invest is USD stocks. Then I had some gain and my account had CAD and USD balance (it seems that the funds converted back to Canadian to maintain my initial deposit as I always set settlement fund to USD when sell it).

Then I use all my funds to buy another stock and it was dumped and my account end up in negative CASH balance which was over 100% of my portfolio. To be more precise, it was 113% of my portfolio. So, I have no choice but to hold the stock for its price to go up, but my account is still in negative because of that 13% over. I called and the agent and he put me on hold for over 5mins... Then he told me the problem was due to the fact that it miss calculated it - because of the conversion from CAD to USD, so it went through buying the stock even if my account did not have enough money. He said that this should not happen with my account (well, it happened dude). Because of this, he told me that the solution is to sell part of my shares to pay it and I will have to afford 20% as marging interest end of the year because I hold it for over 2 weeks. At the end, he throws blame to me telling me that I am the one responsible for the purchase as I have to make sure to have sufficient funds before buying.

Because of this, I sold shares to cover this loss and my portfolio is now 97% (instead of 113%).
How is that even possible? I dont even have margin account and the fund was from my RRSP!

Can I sue them?
13 replies
Sr. Member
User avatar
May 29, 2008
521 posts
290 upvotes
No, you can't sue them for your incompetence.
Deal Addict
Mar 22, 2010
3028 posts
897 upvotes
Your bank sounds like RBC. (And no, you can't sue them)
Deal Fanatic
User avatar
Dec 14, 2010
6391 posts
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This issue happened to me with RBC Direct Investing. An account (RRSP, LIRA, RESP) has the Canadian container and the US container. Distribution are settled on each container separately, according to the Exchange that your stocks are trading at. So if I want to buy US stocks, I do so by first converting Cad$ to US$, and use the US funds to buy a US stock (on the US container), so that dividends can be settled in US$. During the currency conversion, it might require more Cad$ funds than you actually have, placing the account on a negative balance. I never had to cover it, dividends from Canadian companies eventually fill the gap.

The decision to sell to cover the gap was yours, I doubt that RBC can be liable for that. The question you should be asking RBC is when currency conversion takes more cash than you have, what is their mechanism to bring the account to zero, since margin is not allowed by law? If this happened buying a stock on one container using the funds from another container (putting that container in debt), how does RBC bring the container in debt to zero again? I'd suspect it converts the fund over after sometime.

Rod
Deal Fanatic
User avatar
Dec 14, 2010
6391 posts
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yuanchi wrote: At the end, he throws blame to me telling me that I am the one responsible for the purchase as I have to make sure to have sufficient funds before buying.
Next time, tell them:

1. You have no way to know exactly how much funds you'll require if you place a market order or when you convert funds, since RBC only gives an estimate of what your funds will look like, the actual amount is posted 2 business days later;

2. Other brokerages, like IB, rejects a buy or currency order if there are no funds, because it's a regulatory requirement to not use margin on registered accounts; it's more likely that they have a reactive mechanism to bring your account to proper state.

Rod
Member
User avatar
Nov 3, 2008
285 posts
212 upvotes
National Capital Reg…
Hard to blame the broker for that, as you had funds at time of purchase. But when you place a buy order, you agree to purchase and pay for the stock 3 business days from now, with settling out of CAD container, exposes you to FX risk. Seems like FX went against you, but agreement to buy is fixed commitment.
[OP]
Newbie
Sep 9, 2008
92 posts
7 upvotes
Toronto
Where can I get help with this?

I really dont understand a dim! My Portfolio was 97% when I was forced to sell share to recover their crap system - ending up with extra money in account (97%) and now I checked and my portfolio is 103% and I have a negative balance in cash again of 17$! WTH is going on? I dont even make a buy / sell during these time as I long. Could that be some charge from them? How can they charge me if this is self-directed based on commission?

Anyone can point me to where I can get the document to transfer all my RRSP fund from this stpid bank to QuestTrade? I dont mind to pay the 150$ fee. I want stress-free and QuestTrade is the best platform so far even if there are some gaps.
Deal Addict
User avatar
Jan 19, 2005
4474 posts
1384 upvotes
Why not call them to ask why your account is in the current state?

If you don't mind paying $150, why not just sell more shares so you end up with a positive cash balance? With my purchases, I always subtract $50 from the cash balance before calculating how many shares I can buy. The loss of interest of the balance is negligible. It's messy to have a negative balance. I have a MF to gobble up small cash balances (min. $100 per subsequent purchase).
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Deal Fanatic
May 22, 2003
6381 posts
3314 upvotes
Vancouver
I bank with RBC DI. When I place it a trade, it will warn you if you do not have sufficient funds to cover the trade (based on estimated exchange rate). You have to manually acknowledge this before proceeding with trade. I do this all the time as I don't transfer funds unless the trade goes through, but the onus is on you to transfer funds before the trade is settled. I don't know how the heck you got 13% difference on a currency exchange rate, something is wrong.
yuanchi wrote: Where can I get help with this?

I really dont understand a dim! My Portfolio was 97% when I was forced to sell share to recover their crap system - ending up with extra money in account (97%) and now I checked and my portfolio is 103% and I have a negative balance in cash again of 17$! WTH is going on? I dont even make a buy / sell during these time as I long. Could that be some charge from them? How can they charge me if this is self-directed based on commission?

Anyone can point me to where I can get the document to transfer all my RRSP fund from this stpid bank to QuestTrade? I dont mind to pay the 150$ fee. I want stress-free and QuestTrade is the best platform so far even if there are some gaps.
Check your transaction history. Are they charging you interest on the previous negative balance?
Sr. Member
Nov 29, 2014
680 posts
80 upvotes
Pitt Meadows, BC
TD has many hidden fees. RRSP withdraw fee maybe?
I play the video games H2, WC3. I bank with low fee or no fee banks like Implicity. If you got questions ask.
Deal Addict
Mar 1, 2016
1092 posts
397 upvotes
toronto
Jermyzy wrote: I bank with RBC DI. When I place it a trade, it will warn you if you do not have sufficient funds to cover the trade (based on estimated exchange rate). You have to manually acknowledge this before proceeding with trade. I do this all the time as I don't transfer funds unless the trade goes through, but the onus is on you to transfer funds before the trade is settled. I don't know how the heck you got 13% difference on a currency exchange rate, something is wrong.



Check your transaction history. Are they charging you interest on the previous negative balance?


curious, do they include the transaction costs of prior trades made that session in this calculation? (something BMOIL has messed me up a couple times by not doing)
Deal Fanatic
May 22, 2003
6381 posts
3314 upvotes
Vancouver
foreigncontent wrote: curious, do they include the transaction costs of prior trades made that session in this calculation? (something BMOIL has messed me up a couple times by not doing)
Usually yes, after an order is placed, the cash balance is usually updated within a few seconds. even pending trades will lead to a negative balance.
Sr. Member
Nov 29, 2014
680 posts
80 upvotes
Pitt Meadows, BC
I think what is happening here is that the government is withholding money because it's an RRSP. They withhold it to make sure you pay your taxes. TD (or whatever bank this is) and not the government implements the withholding of money for the government.
I play the video games H2, WC3. I bank with low fee or no fee banks like Implicity. If you got questions ask.

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