Norbert's Gambit for CAD-to-EURO fx - Is it possible?

smihaila wrote: ↑Hello everyone,

I might be in a need to convert a fairly large amount of CAD (100k+) to EUR. And I was curious to know if there are any publicly traded stock tickers that dual-trade on most of the Canadian stock exchanges / discount brokers, for EUR exposure and which obviously should also be relatively highly liquid.

Or if such EUR-based form of NG is not possible, I am open to other interesting ideas which can achiever a better FX conversion rate / minimum commissions.

Thank you.

yea I would be interested in this as well also to UK pound.

smihaila wrote: ↑Hello everyone,

I might be in a need to convert a fairly large amount of CAD (100k+) to EUR. And I was curious to know if there are any publicly traded stock tickers that dual-trade on most of the Canadian stock exchanges / discount brokers, for EUR exposure and which obviously should also be relatively highly liquid.

Or if such EUR-based form of NG is not possible, I am open to other interesting ideas which can achiever a better FX conversion rate / minimum commissions.

Thank you.

I'm not sure if it's possible to do Norbert's for Euros, but why would you want to? You'll be taking a position in the equity you purchase until the transaction is processed (I think 3 days?). For Norberts to the USA, they have the etf Horizons US Dollar Currency, which actually tracks the currency and therefore doesn't involve actually taking a position.

Given the uncertainty surrounding Europe now, why risk a huge price swing? You can use a currency exchange provider, the markup on 100k will be like 0.2% or something. I'd recommend doing that.

AvidSaver1 wrote: ↑You'll be taking a position in the equity you purchase until the transaction is processed (I think 3 days?). For Norberts to the USA, they have the etf Horizons US Dollar Currency, which actually tracks the currency and therefore doesn't involve actually taking a position.

For the "classic" USD <-> CAD NG, even without using the Horizon ETF, your equity exposure can be limited to a few seconds or minutes.

adrian2 wrote: ↑For the "classic" USD <-> CAD NG, even without using the Horizon ETF, your equity exposure can be limited to a few seconds or minutes.

I was just extrapolating off this article:

http://canadiancouchpotato.com/2015/02/ ... ts-gambit/

I've never done NG before, but I think settlement takes 3 days. There's also the exchange rate volatility in the meantime.

AvidSaver1 wrote: ↑I've never done NG before, but I think settlement takes 3 days. There's also the exchange rate volatility in the meantime.

I've done the NG many times, even before it was officially named after Norbert (whom I had the pleasure of meeting a few times).

One does not have to wait until settlement to finalize the gambit.

adrian2 wrote: ↑For the "classic" USD <-> CAD NG, even without using the Horizon ETF, your equity exposure can be limited to a few seconds or minutes.

Exactly. I do it all the time using RBC stock (TD can also be used but better to use RBC as it has a higher stock price so a fraction of a penny movement in the stock is a lesser percentage of the stock price with RBC than it would be with TD). I buy and immediately sell within seconds. There is no 3-day settlement to wait for in order to sell except for the two sides to both settle. On rare occasions I break even or make a miniscule profit! There will always be a greater spread and therefore cost using DLR so I never use it.

adrian2 wrote: ↑I've done the NG many times, even before it was officially named after Norbert (whom I had the pleasure of meeting a few times).

One does not have to wait until settlement to finalize the gambit.

Hmmmm, I thought he was the first person to come up with it. How did you find out about it before it was named after him? Or did you invent it!?

eonibm wrote: ↑Hmmmm, I thought he was the first person to come up with it. How did you find out about it before it was named after him? Or did you invent it!?

I used the same principle before it was "invented" -- IOW, I co-invented it, but neglected to name it.

How would you hold Euros? Does any brokerage offer a Euro-dominated account here in Canada? The NG would be useless if the trade could not settle in Euro funds.

I use XE for exchanges to Euros. They mail me a cheque and I deposit it into my Scotiabank Euro account. But this is for smaller amounts, less than $5000, that I take out in cash.

Be careful with a Canadian Euro bank account, if you want a bank draft or other similar instrument, if available. Your Euros may be converted to C$ then back to Euros.

AvidSaver1 wrote: ↑I'm not sure if it's possible to do Norbert's for Euros, but why would you want to? You'll be taking a position in the equity you purchase until the transaction is processed (I think 3 days?). For Norberts to the USA, they have the etf Horizons US Dollar Currency, which actually tracks the currency and therefore doesn't involve actually taking a position.

Given the uncertainty surrounding Europe now, why risk a huge price swing? You can use a currency exchange provider, the markup on 100k will be like 0.2% or something. I'd recommend doing that.

Who has such a low markup?

fastlayne wrote: ↑How would you hold Euros? Does any brokerage offer a Euro-dominated account here in Canada? The NG would be useless if the trade could not settle in Euro funds.

I use XE for exchanges to Euros. They mail me a cheque and I deposit it into my Scotiabank Euro account. But this is for smaller amounts, less than $5000, that I take out in cash.

Be careful with a Canadian Euro bank account, if you want a bank draft or other similar instrument, if available. Your Euros may be converted to C$ then back to Euros.

I'm pretty sure HSBC InvestDirect offers Euro-denominated and GBP-denominated subaccounts. I remember someone saying IB does as well, but don't know.
You will also need a stock listed both in Canada and in Europe. I am not aware of any off the top of my head. I believe Thomson Reuters was listed in Canada and the UK but don't think it is any longer. I thought Bombardier might be (since its train division is essentially a European company) but while writing this I checked and it seems not to be. I suppose you could first do a Norbert to the US and then another one US/Europe, but it sounds like a hassle and will likely leave you with some stranded USD.

BTW, indeed as someone has said when you do a Norbert gambit you are not exposed to the currency rate fluctuation or stock price fluctuation for 3 days, merely for the second(s) it takes to execute the opposing trades. However, it will take you 3 days to get the money (for the trades to settle), at the fx rate present at the time of the trade, plus the transfer time at either end if applicable.

houska wrote: ↑I'm pretty sure HSBC InvestDirect offers Euro-denominated and GBP-denominated subaccounts. I remember someone saying IB does as well, but don't know.
You will also need a stock listed both in Canada and in Europe. I am not aware of any off the top of my head. I believe Thomson Reuters was listed in Canada and the UK but don't think it is any longer. I thought Bombardier might be (since its train division is essentially a European company) but while writing this I checked and it seems not to be. I suppose you could first do a Norbert to the US and then another one US/Europe, but it sounds like a hassle and will likely leave you with some stranded USD.

BTW, indeed as someone has said when you do a Norbert gambit you are not exposed to the currency rate fluctuation or stock price fluctuation for 3 days, merely for the second(s) it takes to execute the opposing trades. However, it will take you 3 days to get the money (for the trades to settle), at the fx rate present at the time of the trade, plus the transfer time at either end if applicable.

Thank you for clearing this up. Are you subject to currency fluctuations during the 3 days where the trades settle?

Yikes, freaken complicated way of preserving purchasing power of CAD in EUR. Go to company like Interactive Brokers or any other company dealing with forex.

Open CAD account ( Long CAD ). If you deposit $100,000 CAD, buy 100K EURCAD ( Long EUR) . The spread is minimal and I think you're further ahead.

Once transaction is closed and settled its very easy to transfer to preferred currency at minimal cost well below bank rate.

Of course, I may be missing the point!

Search is your friend...

norbert-gambit-euro-possible-1357187/

Option one is just use IB for FX straight up. Or trade forward as per advice above. Not great luck with gambit there IMHO. Just call if you use them for journalling issues.

Lots of interlisted stocks, lots of settlement options at TDWH Global or HSBC. Fees, inter day risk and liquidity of the issue for that size trade - caveat emptor.

http://www.tmxmoney.com/en/research/interlisted.html

Have heard of Ireland and Frankfurt exchanges backofficed for journalling, but never tried personally. YMMV.

fastlayne wrote: ↑How would you hold Euros? Does any brokerage offer a Euro-dominated account here in Canada? The NG would be useless if the trade could not settle in Euro funds.
I use XE for exchanges to Euros. They mail me a cheque and I deposit it into my Scotiabank Euro account. But this is for smaller amounts, less than $5000, that I take out in cash.
Be careful with a Canadian Euro bank account, if you want a bank draft or other similar instrument, if available. Your Euros may be converted to C$ then back to Euros.

I have tried the XEtrade / CustomHouse (now Western Union FX solutions), and the account set-up / activation process is just a hassle. They need now a "guarantor". I can't get a guarantor because I'm currently overseas and my money is in Canadian banks (Achieva) and I would like to be able to coordinate such CAD->EUR conversion process without having to be physically present in Canada, and at low cost/loss.

I recall that long time ago, when XEtrade was in partnership with Custom House (about 6-7 years ago), the setup was much simpler to undertake - they needed scans of ID docs and bank account and that was all. Why are they annoying me with other stupid bureaucratic procedures??

Yes, I am well aware of the pitfalls of bank drafts as negotiation instruments in general - I always try to stay away from them.
Thank you.

bruceh2015 wrote: ↑Yikes, freaken complicated way of preserving purchasing power of CAD in EUR. Go to company like Interactive Brokers or any other company dealing with forex.
Open CAD account ( Long CAD ). If you deposit $100,000 CAD, buy 100K EURCAD ( Long EUR) . The spread is minimal and I think you're further ahead.
Once transaction is closed and settled its very easy to transfer to preferred currency at minimal cost well below bank rate.
Of course, I may be missing the point!

Great idea, I could try that. Assuming that I meet all the requirements from IB to be considered an "informed investor" or whatever the terminology is.
Could the same be done also via QuestradeFX? And at the same modest spread as IB?

I had an FX acct setup with QT long time ago, but I couldn't understand how I was supposed to get the foreign currency from the CAD-foreign pair. While doing some tests with their platform, it all looked as if you use it only to arbitrate/explot price differentials but somehow at the end of the day you end up back with CAD. Which I don't want in this particular case. Sorry if I'm a noobie with FX / forwards - so far I was doing only stock trading.

Thank you.

canconsumer wrote: ↑Search is your friend...

norbert-gambit-euro-possible-1357187/

Option one is just use IB for FX straight up. Or trade forward as per advice above. Not great luck with gambit there IMHO. Just call if you use them for journalling issues.

Lots of interlisted stocks, lots of settlement options at TDWH Global or HSBC. Fees, inter day risk and liquidity of the issue for that size trade - caveat emptor.

http://www.tmxmoney.com/en/research/interlisted.html

Have heard of Ireland and Frankfurt exchanges backofficed for journalling, but never tried personally. YMMV.

Thanks for the links. Now I need to spend some time to understand all the technical gimmicks involved ;-)

Altanative way. Call msb or afex to get spot Rate.

Having looked into this a number of times, attempting to do a gambit for anything other than US/CAN and vice-versa is frought with difficult and risk if it can even be done. Just find the cheapest fx commission and go with it.