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

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larry81
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Re: Norbert's gambit - Can$ to US$ or vice versa

Post by larry81 »

Performed a rather large gambit today with TDWH phone rep. Had a little delay for the sell operation and the market moved (in the wrong direction!) of 4 cents on TD stock. Overall i still saved $$$:

XE.COM SPOT 1.0861
TD Currency Conversion Rate: 1.0895
Norbert's gambit Result: 1.0876

Cost ~250$ for a 200k+ CAD->USD conversion :)
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Re: Norbert's gambit - Can$ to US$ or vice versa

Post by gsp_ »

larry81 wrote:XE.COM SPOT 1.0861
TD Currency Conversion Rate: 1.0895
Norbert's gambit Result: 1.0876
I 'm curious, how was the TD quote obtained? Thanks.
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Re: Norbert's gambit - Can$ to US$ or vice versa

Post by gsp_ »

sstackho wrote:On Horizon's website, HXS and HXS.U are listed with the same CUSIP (44051U208). However, HXT (44049A124) and HXT.U (44049A116) have slightly different CUSIPs...

I contacted Horizons, and they have now updated their website so that HXT and HXT.U have the same CUSIP.
I find this worrying for a totally unrelated reason.

Still not sure what to make of the question I posed in that thread as it relates to HXS/HXS.U and HXT/HXT.U. All opinions or suggestions welcomed.
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Re: Norbert's gambit - Can$ to US$ or vice versa

Post by larry81 »

gsp_ wrote:
larry81 wrote:XE.COM SPOT 1.0861
TD Currency Conversion Rate: 1.0895
Norbert's gambit Result: 1.0876
I 'm curious, how was the TD quote obtained? Thanks.
"President Account" phone rep.

Anything unusual about that quote ?
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Re: Norbert's gambit - Can$ to US$ or vice versa

Post by gsp_ »

larry81 wrote:"President Account" phone rep.

Anything unusual about that quote ?
Thanks. Not really unusual, was just intrigued by the relatively small spread(.31%, for a bank) vs XE and wondered if it was an online quote or through a rep and if he had to consult a trading desk. Obviously the spread is related to the amount in play.
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Re: Norbert's gambit - Can$ to US$ or vice versa

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gsp_ wrote:
larry81 wrote:"President Account" phone rep.

Anything unusual about that quote ?
Thanks. Not really unusual, was just intrigued by the relatively small spread(.31%, for a bank) vs XE and wondered if it was an online quote or through a rep and if he had to consult a trading desk. Obviously the spread is related to the amount in play.
the rep did consult the trading desk to get the quote, and mentioned that rate are "not bad" when you convert >70k.
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Re: Norbert's gambit - Can$ to US$ or vice versa

Post by AltaRed »

I can vouch for very small spreads when converting large sums and being able to go through the bank forex trading desk (almost exactly spot rate available to the trading desk). Did it with Scotia in 2012 (think their threshold was about $75k but I was converting multiples of that).
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Re: Norbert's gambit - Can$ to US$ or vice versa

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sstackho wrote:I contacted Horizons, and they have now updated their website so that HXT and HXT.U have the same CUSIP.

However, the market makers do not appear to be putting much effort into maintaining a market for HXT.U. I have seen several periods with only ~30 lots available on the entire Ask side. (Though it varies... At this very moment there are 380 lots available.)
FYI - using HXS and HXS.U for a gambit went off without a hitch in a TDDI RSP account this morning. The ETF is thinly traded, but the market makers provide good availability at a $0.02 bid/ask spread on both HXS and HXS.U. I estimate to convert $60k, it costs around 10bp to convert CAD to USD compared to the currency spot rate.
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Re: Norbert's gambit - Can$ to US$ or vice versa

Post by ClosetIndexer »

sstackho wrote:
sstackho wrote:I contacted Horizons, and they have now updated their website so that HXT and HXT.U have the same CUSIP.

However, the market makers do not appear to be putting much effort into maintaining a market for HXT.U. I have seen several periods with only ~30 lots available on the entire Ask side. (Though it varies... At this very moment there are 380 lots available.)
FYI - using HXS and HXS.U for a gambit went off without a hitch in a TDDI RSP account this morning. The ETF is thinly traded, but the market makers provide good availability at a $0.02 bid/ask spread on both HXS and HXS.U. I estimate to convert $60k, it costs around 10bp to convert CAD to USD compared to the currency spot rate.
This is great info. My standard has always been to use POT, but if HXS and HXS.U can give you 2c spreads over that large an order, it looks like it would definitely be a better choice. The only downside is that I use the short-then-buy version of the Gambit, which means I would need to trade in full lots, since you can't short partial lots on the TSX.

Does anyone know (or know how to determine) the Minimum Guaranteed Fill amount for HXS?
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Re: Norbert's gambit - Can$ to US$ or vice versa

Post by larry81 »

Performed two large Gambit today with TD stock:

Gambit #1
XE.COM SPOT 1.08544
Norbert's gambit Result: 1.086053397

Gambit #2
XE.COM SPOT 1.08544
Norbert's gambit Result: 1.085664095

I used market orders on buy/sell. I was used to buying/selling at ASK/BID. For liquid stock, market order are fine.
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Re: Norbert's gambit - Can$ to US$ or vice versa

Post by marcharry »

I did a little experiment today, at my expense that I thought might interest some posters.

I have a "business forex account" with TD i.e. it is a guy at the forex desk who gets "better/wholesale rates". He will only settle in a business trading account. I have had the acct for years and never used it - tending to use Norbert's Gambit.

I traded 53K CDN to USD through the desk. Got a rate of 1.0798 or $49 083
Taking an interlisted stock 3 minutes later I got a spot rate of 1.0754 implying a premium paid of $201
I then went to the garden variety online forex transfer screen for an amount of $48, 879, a premium of $204
Which looks like 38 basis points spread in either scenario. Of course the market may have moved a little while I was fiddling.

The last time I went to settle an NG on the phone with waterhouse they insisted on using phone rather than online rates (as they used to). Is that still the case?
If so, I have to learn to do it online - is there a good guide to that somewhere (step by step). Sell short>buy the other side>call for the journal?
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Re: Norbert's gambit - Can$ to US$ or vice versa

Post by SQRT »

Marcharry. I found it a little difficult to follow your post. Which method was best?
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Re: Norbert's gambit - Can$ to US$ or vice versa

Post by brucecohen »

marcharry wrote:I have to learn to do it online - is there a good guide to that somewhere (step by step).
See here
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Re: Norbert's gambit - Can$ to US$ or vice versa

Post by pmj »

That guide mostly covers TDW. I'm helping a friend who's moving away from a poor relationship with a "full" service broker to a BMO InvestorLine account - and I want to get my mind around the BMO procedure (I'm at TDW). I just found this guide - for those who use BMO, is it accurate? It appears as though the procedure is the same at both reg & non-reg A/Cs?
http://financialcrooks.com/how-move-sto ... e-account/
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Re: Norbert's gambit - Can$ to US$ or vice versa

Post by DenisD »

pmj wrote:That guide mostly covers TDW.
They have guides for the major brokers. Click on 2013 in the White Papers page. Unfortunately, it looks like they only document conversion using DLR.
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Re: Norbert's gambit - Can$ to US$ or vice versa

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SQRT wrote:Marcharry. I found it a little difficult to follow your post. Which method was best?
If I assume that the market did not move much in the interim, the "business trading" desk provided rates that were no better than the basic online transfer funds screen.

On an absolute basis you can probably do better with NG but with the phone rate (vs. online) it is likely not much better (absolute basis).
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Re: Norbert's gambit - Can$ to US$ or vice versa

Post by Solo »

marcharry wrote: The last time I went to settle an NG on the phone with waterhouse they insisted on using phone rather than online rates (as they used to). Is that still the case?
I was planning to do a NG in a non-registered account this week so I am also interested in knowing whether TD is now insisting on using the phone rate to settle the NG.
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Re: Norbert's gambit - Can$ to US$ or vice versa

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Solo wrote:
marcharry wrote: The last time I went to settle an NG on the phone with waterhouse they insisted on using phone rather than online rates (as they used to). Is that still the case?
I was planning to do a NG in a non-registered account this week so I am also interested in knowing whether TD is now insisting on using the phone rate to settle the NG.
I've found the most reliable way to get NGs done in non-registered accounts is to short one side first, then immediately buy the other side. Then you just wait three days before calling and asking them to journal the shares over to flatten the position. That way you remove any risk of the underlying value changing while you argue with them over the phone. You do want to make sure to wait the full three days until settlement before you call though. Otherwise if you get an inexperienced rep who doesn't understand the shorting against the box rules, you'll have an unnecessary hassle. By waiting, even if they think you shouldn't be able to be in a long-short position, it doesn't really matter - you just reiterate that you'd like them to flatten the position, so everybody's happy.
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Re: Norbert's gambit - Can$ to US$ or vice versa

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Thanks Closetindexer - good advice :thumbsup:
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Re: Norbert's gambit - Can$ to US$ or vice versa

Post by marcharry »

ClosetIndexer wrote:
Solo wrote:
marcharry wrote: The last time I went to settle an NG on the phone with waterhouse they insisted on using phone rather than online rates (as they used to). Is that still the case?
I was planning to do a NG in a non-registered account this week so I am also interested in knowing whether TD is now insisting on using the phone rate to settle the NG.
I've found the most reliable way to get NGs done in non-registered accounts is to short one side first, then immediately buy the other side. Then you just wait three days before calling and asking them to journal the shares over to flatten the position. That way you remove any risk of the underlying value changing while you argue with them over the phone. You do want to make sure to wait the full three days until settlement before you call though. Otherwise if you get an inexperienced rep who doesn't understand the shorting against the box rules, you'll have an unnecessary hassle. By waiting, even if they think you shouldn't be able to be in a long-short position, it doesn't really matter - you just reiterate that you'd like them to flatten the position, so everybody's happy.
Yes, I called today to enable short selling in the account and got a lecture that I would be shorting against the box. We will have to see - I will do the short side trade first.

In the RRSP where I need to convert US to CDN. I have 50K in US MMF. I will buy RY shares on US exchange - despite active trade washing it still gives me a message that currency will be converted (I ignore that), then sell same # of shares on the CDN exchange. That will work right? Trade washing makes it work - no call required? Correct?
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Re: Norbert's gambit - Can$ to US$ or vice versa

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They should offer a flat rate exchange for Presidents Accounts! Spot rate, any amount, $45 ?
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Re: Norbert's gambit - Can$ to US$ or vice versa

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marcharry wrote:We will have to see - I will do the short side trade first.

In the RRSP where I need to convert US to CDN. I have 50K in US MMF. I will buy RY shares on US exchange - despite active trade washing it still gives me a message that currency will be converted (I ignore that), then sell same # of shares on the CDN exchange. That will work right? Trade washing makes it work - no call required? Correct?
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Re: Norbert's gambit - Can$ to US$ or vice versa

Post by pmj »

adrian2 wrote:
marcharry wrote:We will have to see - I will do the short side trade first.

In the RRSP where I need to convert US to CDN. I have 50K in US MMF. I will buy RY shares on US exchange - despite active trade washing it still gives me a message that currency will be converted (I ignore that), then sell same # of shares on the CDN exchange. That will work right? Trade washing makes it work - no call required? Correct?
Yes to all your questions.
With just one caveat - if you're planning a C$ buy during the three days that it takes for TDDI to sell the US$ MM, settle the trades, sort out the washes, etc - you'll only have the nominal after-vig value of C$ available to you (unless you have some spare cash-like C$ or US$ hanging around somewhere).

Added - and a similar situation arises when using NG in the opposite direction.
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Re: Norbert's gambit - Can$ to US$ or vice versa

Post by DmDave »

Has anyone tried doing Norbert's gambit with Horizon ETF? Specifically I'm looking at HXS and HXS.U. Both have the same CUSIP number of 44051U208.

My experience has been to use DLR/DLR.U to exchange my CDN to USD, so that I can purchase VTI or VXF. But because of the spread of DLR is a bit large, I've been looking at alternatives. I have no tried HXS yet, but will look into the spread when I have my next paycheque.

One benefit I can see, at least for myself, is that since I'll be buying US market anyway, even if HXS does drop in the 3 days that it needs to settle, it won't affect my overall strategy, unlike individual stocks, say RY. I use Qtrade FYI.
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Re: Norbert's gambit - Can$ to US$ or vice versa

Post by gsp_ »

DmDave wrote:Has anyone tried doing Norbert's gambit with Horizon ETF? Specifically I'm looking at HXS and HXS.U.
See posts above.
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