marty123 wrote:I don't know how close SCI and spot are ...
It would be good to know if there's a small institutional sized commission built into this or not, but even if so it probably wouldn't amount to anything significant except for a very active trader who kept hitting it.
... hold USD cash in a MMF.
It's not clear if a Canadian U$ MMF would qualify for a preferential purchase rate as a "US security", or if they only mean US-traded stocks and bonds. At any rate, I expect for most there may, in iTrade's setup, be no real need to hold a US MMF.
So, except for the cost and the fact that iTrade will continue to take its pound of flesh on USD dividends, it appears superior to RBCDI because the Norbert Gambit doesn't need to be applied, and the rejournaling unnecessary.
I disagree with this. The cost of NG is two commisions plus a small spread; probably about $30 or less in most cases. The U$ generated by a NG can be used anytime thereafter at RBCDI, whether the same day, week, month, quarter or next quarter. So it's really more flexible than a $30/quarter charge. Moreover, how many NG's is it really necessary to do in an RSP? I expect most sensible investors could arrange things to do at most 1 NG per year from their RSP contribution. So it's a cost of $30 vs $120 per year, and if you get into a steady state with the US holdings, there are no NGs.
You are right though, the iTrade method is more convenient than doing the buy and sell of NG (there may be no need to journal in an RSP), and it would avoid the worst-case scenario of the NG intermediary stock cratering before it was sold.
As far as the cost is concerned, $30 per quarter should be attractive for someone that pays the FOREX vig once or twice per year. A 2% vig on $6,000 (often just 1 board lot of one share) would be the break-even point.
Yes, it's cheaper than an eggregious 2% vig, that's the "better than nothing" part. But given that NG is now possible at RBCDI (and the equivalent at TD with their RSP washes), a 2% vig is no longer a very interesting point of comparison.
Another question: How would a US stock taken over for cash be treated? If it was like a dividend, with presumed large vig, then you might want to sell it rather than tender to the bid.