Norbert's gambit - Can$ to US$ or vice versa

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AltaRed
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Re: Norbert's gambit - Can$ to US$ or vice versa

Post by AltaRed »

I wouldn't call that a gambit. I'd call it a purchase of shares and then a journalling of shares over to the USD side. But why journal it over to the USD side until you are ready to actually sell it, presumably on the NYSE? You could receive a dividend during the interim and it would be converted to USD at retail forex rates if the stock sits on the USD side of the account. Journalling is not a 'cost' that I know of (isn't at Scotia iTrade).

I don't know about TDDI but some brokerages (like Scotia iTrade) allow you to journal shares over to another account (side) by simply filling out and submitting an online form.
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Re: Norbert's gambit - Can$ to US$ or vice versa

Post by Thegipper »

AltaRed wrote:I wouldn't call that a gambit. I'd call it a purchase of shares and then a journalling of shares over to the USD side. But why journal it over to the USD side until you are ready to actually sell it, presumably on the NYSE? You could receive a dividend during the interim and it would be converted to USD at retail forex rates if the stock sits on the USD side of the account. Journalling is not a 'cost' that I know of (isn't at Scotia iTrade).

I don't know about TDDI but some brokerages (like Scotia iTrade) allow you to journal shares over to another account (side) by simply filling out and submitting an online form.
RBC allows you to sell your shares directly in the US markets and vice versa. No journal required.
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Re: Norbert's gambit - Can$ to US$ or vice versa

Post by monk127 »

AltaRed wrote:I wouldn't call that a gambit. I'd call it a purchase of shares and then a journalling of shares over to the USD side. But why journal it over to the USD side until you are ready to actually sell it, presumably on the NYSE? You could receive a dividend during the interim and it would be converted to USD at retail forex rates if the stock sits on the USD side of the account. Journalling is not a 'cost' that I know of (isn't at Scotia iTrade).
You're right, I should keep it in CAD until I'm ready to sell in case of forex on dividends, didn't think of that.
AltaRed wrote: I don't know about TDDI but some brokerages (like Scotia iTrade) allow you to journal shares over to another account (side) by simply filling out and submitting an online form.
Thegipper wrote: RBC allows you to sell your shares directly in the US markets and vice versa. No journal required.
Yes, I guess where I'm coming from is that I'm annoyed at TD and I'm contemplating switching out to RBC or BMO. I was happy last year when they got USD RSP subaccounts and they were no longer taking their vig on USD dividends but I didn't realize they would make Norbert's Gambit more painful. It seems it's not possible at TD now without a phone call to a poor soul taking call after call. I was used to doing online gambits into their "auto wash US money market" whatever. I guess my question is, is there any contingency where they could refuse to journal over an interlisted stock NY > TSE or TSE > NY and without a fee?

...edited with proper quote attributions, sorry.
Last edited by monk127 on 21 May 2016 22:45, edited 1 time in total.
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Re: Norbert's gambit - Can$ to US$ or vice versa

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I can't imagine a situation where any broker could charge a fee for journalling an identical CUSIP from one sub-account to another. Each brokerage has some quirks that make it uncompetitive relative to the competition but they know where that is (no dummies there) and they choose to stay the course. But something like a fee for journalling would be a blatant and feeble attempt to generate small amounts of revenue (few people likely know about or use gambits). I don't see anything to be worried about.
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Re: Norbert's gambit - Can$ to US$ or vice versa

Post by Spudd »

I'm a TD customer and I journal things relatively frequently. Never encountered any resistance or fee for it.
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Re: Norbert's gambit - Can$ to US$ or vice versa

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Discussion on ACB of Journaled Shares moved to Taxing Situations
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Re: Norbert's gambit - Can$ to US$ or vice versa

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moved to Taxing Situations
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Re: Norbert's gambit - Can$ to US$ or vice versa

Post by monk127 »

AltaRed wrote:I can't imagine a situation where any broker could charge a fee for journalling an identical CUSIP from one sub-account to another. Each brokerage has some quirks that make it uncompetitive relative to the competition but they know where that is (no dummies there) and they choose to stay the course. But something like a fee for journalling would be a blatant and feeble attempt to generate small amounts of revenue (few people likely know about or use gambits). I don't see anything to be worried about.
Spudd wrote:I'm a TD customer and I journal things relatively frequently. Never encountered any resistance or fee for it.
Thanks all for the responses.
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Re: Norbert's gambit - Can$ to US$ or vice versa

Post by gsp_ »

Several weeks back I tried to do a NG in my TDDI unregistered account, converting some USD funds to CAD. However when phoning in to execute the sale I was put on hold for about 10 minutes while the rep made sure he was up to date on NG procedures before informing me they'd be charging a phone commission. I declined and told him I'd either move to IB or convert my TDDI cash account to margin.

Converting to margin was easier so that's the route I took. In planning my shorting first NG, I just want to make sure I have the steps down and avoid any potential issues. I've never shorted anything before and have no use for margin, this is strictly to make NGs easier/cheaper.


1. Short Sell RY(tsx) in CAD Margin Short(G) account. Make sure the order is executed before moving to next step.
2. Buy RY(US) in USD Margin(F) account. This is the part I'm unsure about, was hesitating between that or Buy to Cover in the USD Margin Short(H) account.
3. Call TDDI anytime in the next 3 business to request journaling of shares.

Thankful for your comments and suggestions.
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Re: Norbert's gambit - Can$ to US$ or vice versa

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gsp_ wrote:1. Short Sell RY(tsx) in CAD Margin Short(G) account. Make sure the order is executed before moving to next step.
2. Buy RY(US) in USD Margin(F) account. This is the part I'm unsure about, was hesitating between that or Buy to Cover in the USD Margin Short(H) account.
3. Call TDDI anytime in the next 3 business to request journaling of shares.
1. yes
2. buy (not buy to cover)
3. call on settlement date for the journal
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Re: Norbert's gambit - Can$ to US$ or vice versa

Post by gsp_ »

Thanks adrian. :thumbsup:

In the past when doing registered account NGs the phone rep took care of the journaling entry after proceeding with the stock sale(at online rate). Have they really told NGers to call back if calling before the settlement date? Not a big deal but sometimes you just want to get it over with and move on to other things by calling right after completing the trades.
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Re: Norbert's gambit - Can$ to US$ or vice versa

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gsp_ wrote:Converting to margin was easier so that's the route I took.
What was the process?
1. Short Sell RY(tsx) in CAD Margin Short(G) account. Make sure the order is executed before moving to next step.
2. Buy RY(US) in USD Margin(F) account. This is the part I'm unsure about, was hesitating between that or Buy to Cover in the USD Margin Short(H) account.
3. Call TDDI anytime in the next 3 business to request journaling of shares.
Does the order matter? It makes more sense to me that I buy RY(US) first and then sell RY(TSX). In this order I am never really short RY because the shares are already in the US account. This also makes me ask why I need a margin account at all.
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Re: Norbert's gambit - Can$ to US$ or vice versa

Post by SQRT »

auntyvirus wrote:
gsp_ wrote:Converting to margin was easier so that's the route I took.
What was the process?
1. Short Sell RY(tsx) in CAD Margin Short(G) account. Make sure the order is executed before moving to next step.
2. Buy RY(US) in USD Margin(F) account. This is the part I'm unsure about, was hesitating between that or Buy to Cover in the USD Margin Short(H) account.
3. Call TDDI anytime in the next 3 business to request journaling of shares.
Does the order matter? It makes more sense to me that I buy RY(US) first and then sell RY(TSX). In this order I am never really short RY because the shares are already in the US account. This also makes me ask why I need a margin account at all.
Order does matter. Must do the short first. They have rules preventing the short sale of a stock you already own. I went too fast once, thinking the short sale was done (it wasn't). Had to reverse the purchase and start over again. Of course the market moved away from me in the meantime. Cost me a couple hundred bucks.
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Re: Norbert's gambit - Can$ to US$ or vice versa

Post by adrian2 »

gsp_ wrote:Have they really told NGers to call back if calling before the settlement date? Not a big deal but sometimes you just want to get it over with and move on to other things by calling right after completing the trades.
They have told me to call on settlement date.
YMMV, please report if they accommodate an early request.
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Re: Norbert's gambit - Can$ to US$ or vice versa

Post by gsp_ »

auntyvirus wrote:
gsp_ wrote:Converting to margin was easier so that's the route I took.
What was the process?
Called TDDI rep and setup an appointment. Passed by their office, reviewed the already filled out docs, signed the application and provided a piece of ID. Roughly a week later my cash accounts became listed as margin on Webbroker.
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Re: Norbert's gambit - Can$ to US$ or vice versa

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Just had a negative Norbert's Gambit experience with BMOIL. I've done a few Gambits in the past so I know what to do. The Gambit itself was straight forward and successful but I ended being charged interest at 21.25 % because of BMOIL's slowness in journalling the shares over.

I bought and sold a bank stock on the same day and then bought a USD ETF that same day to covert CAD to USD and invest. No issues there.

The interest charge occurred because BMOIL journaled the bank shares over to cancel the short sale out about 5 days after the settlement date. I secured messaged them before to do the journal before the settlement date. They had previously told me not to worry about contacting them about journalling because their system does it automatically on the settlement date. (according to them)

When I asked them to reverse the interest they dragged their heels and then finally said they would do it for me this time as a courtesy but ultimately it is my responsibility. When I read PWL Capital's guide about NG they don't say that interest charges are to be expected and are the responsibility of the investor. If I own 200 shares of RY and sell short 200 shares of RY trading in New York am I really borrowing? I'm not sure what the policies of other brokerages are on the interest charges associated with NG. If someone else has a more favourable stance, then I might transfer my account from BMOIL to them. What's the best way to avoid the hassle of being charged interest and then having to fight with them to reverse it when doing NG?
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Re: Norbert's gambit - Can$ to US$ or vice versa

Post by pmj »

Was this in a registered or a non-registered account?
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Re: Norbert's gambit - Can$ to US$ or vice versa

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pmj wrote:Was this in a registered or a non-registered account?
Registered account.
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Re: Norbert's gambit - Can$ to US$ or vice versa

Post by DenisD »

Just over four years ago, I helped a friend convert a portfolio of RBC index mutual funds to Canadian and US domiciled ETFs. This was in a RBCDI RRSP. There was no cash in the account.

On day one, we sold the index funds, did the NG, bought Canadian and US domiciled ETFs. On day two, once we knew the precise proceeds of the index funds, we bought the smallest Canadian ETF.

Sometime later, after everything had sorted itself out, a $20 interest charge popped up. My friend called RBCDI. The rep said he couldn't see why there was an interest charge and he cancelled it.
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Re: Norbert's gambit - Can$ to US$ or vice versa

Post by gsp_ »

minimalist wrote:Just had a negative Norbert's Gambit experience with BMOIL. I've done a few Gambits in the past so I know what to do. The Gambit itself was straight forward and successful but I ended being charged interest at 21.25 % because of BMOIL's slowness in journalling the shares over.

I bought and sold a bank stock on the same day and then bought a USD ETF that same day to covert CAD to USD and invest. No issues there.

The interest charge occurred because BMOIL journaled the bank shares over to cancel the short sale out about 5 days after the settlement date. I secured messaged them before to do the journal before the settlement date. They had previously told me not to worry about contacting them about journalling because their system does it automatically on the settlement date. (according to them)
Were the settlement dates the same? Canadian markets were closed an extra day than US markets during the holidays(Dec 27 IIRC).
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Re: Norbert's gambit - Can$ to US$ or vice versa

Post by ockham »

minimalist wrote:Just had a negative Norbert's Gambit experience with BMOIL. I've done a few Gambits in the past so I know what to do. The Gambit itself was straight forward and successful but I ended being charged interest at 21.25 %
I did three NGs in my MIL's BMOIL account in 2016 (March, July, October). The gambit itself worked flawlessly. But on each occasion, the account was charged interest. Each time, I called in, the rep couldn't explain or rationalize the charge, and promptly reversed it.

Not a problem really, as long as I remember to check the account activity history now and then, to catch anomalies.
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Re: Norbert's gambit - Can$ to US$ or vice versa

Post by minimalist »

gsp_ wrote:
minimalist wrote:Just had a negative Norbert's Gambit experience with BMOIL. I've done a few Gambits in the past so I know what to do. The Gambit itself was straight forward and successful but I ended being charged interest at 21.25 % because of BMOIL's slowness in journalling the shares over.

I bought and sold a bank stock on the same day and then bought a USD ETF that same day to covert CAD to USD and invest. No issues there.

The interest charge occurred because BMOIL journaled the bank shares over to cancel the short sale out about 5 days after the settlement date. I secured messaged them before to do the journal before the settlement date. They had previously told me not to worry about contacting them about journalling because their system does it automatically on the settlement date. (according to them)
Were the settlement dates the same? Canadian markets were closed an extra day than US markets during the holidays(Dec 27 IIRC).
Yes, same settlement dates.

I wouldn't mind having to call in if they would reverse the interest without hassling me. In my case, the rep right away saw the short sale of the NG and pinpointed that as the reason for the interest charge saying that I was responsible.

Someone I know told me that if I would have waited until the day after the NG to make the USD ETF purchase I wouldn't have been charged interest. Does this make sense given that the shares were only journaled 5 days after settlement?
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Re: Norbert's gambit - Can$ to US$ or vice versa

Post by minimalist »

Just had a theory on how to avoid these NG interest charges.

If you wait until the shares have been journalled to purchase your long term US stock will you 100% absolutely be safe from these pesky 21.25% interest charges?

Once the NG stocks have settled and you have transformed your CAD cash to USD cash and the shares have been journalled to cancel each other out shouldn't you be free to purchase a US stock with your settled USD cash without fear of being charged 21.25%?

The downside of this approach is lost potential return from time out of the market.
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Re: Norbert's gambit - Can$ to US$ or vice versa

Post by AltaRed »

Indeed but
minimalist wrote:The downside potential upside of this approach is lost potential gain from buying at a lower price in return from time out of the market.
I have provided another possibility for you. :lol: The systems shouldn't generate a charge. Me thinks they need to get their coding monkey to tweak their algorithm.
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Re: Norbert's gambit - Can$ to US$ or vice versa

Post by pmj »

Like AR says - it shouldn't be that way.
Another way to resolve this - preferably in a registered account where there are no ACB issues - is to journal a dual-listed stock you already own at any date in advance - then when you have the cash in the home account and want to do the NG - sell the already-journalled stock, and replace it using the cash in the home account.
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