Norbert's Gambit

[longlake95]

Getting tired of the wide spread the brokers apply to fx transactions. Just moved some $$$ from the CAD "side" of my RRSP to the USD "side" and the spread, roughly calculated, was around 90 BPS. Thought of trying Norbert's Gambit to move cash. Have you tried this maneuver?

 

LL

 

[Rod]

Getting tired of the wide spread the brokers apply to fx transactions. Just moved some $$$ from the CAD "side" of my RRSP to the USD "side" and the spread, roughly calculated, was around 90 BPS. Thought of trying Norbert's Gambit to move cash. Have you tried this maneuver?

 

LL

 

I always use DLR an DLR.U to move cash between currencies at a very low cost.

[EliG]

I've been using NG on a regular basis for the last ~15 years. All in all, I think I saved more than $10K on forex fees.

 

What specifically do you want to know?

[KCLarkin]

I've used it too and saved $1000s. I suggest that you google it -- there is a blog that has details for each of the brokers.

[Kapitalust]

I'm with RBC Direct and all you have to do on this platform is buy an interlisted stock on the Canadian side and then immediately sell it on the US side, or vice versa. Been doing it for many years now.

 

Once everything settles, you have paid $9.95 for buying and then $9.95 for selling, and whatever spread occurred in the 15 seconds or so when you hit buy and then hit sell.

 

I use RY as it's got tons of volume on both the TSX and NYSE.

 

Easy peasy.

[gokou3]

I've used it too and saved $1000s. I suggest that you google it -- there is a blog that has details for each of the brokers.

 

I think this is the one you were referring to:

https://www.pwlcapital.com/en/Advisor/Toronto/Toronto-Team/White-Papers

 

The blog used DLR as an example.  For BMO in particular, I would have to call in to execute the second half of the trade.  I wonder if I could avoid calling if I use a dual-listed security, e.g. Enbridge (ENB)?  Buy on TSX and sell on NYSE.. not sure how I can specify the exchange for this trade though - perhaps by specifying the settlement currency?

[EliG]

I've used it too and saved $1000s. I suggest that you google it -- there is a blog that has details for each of the brokers.

 

I think this is the one you were referring to:

https://www.pwlcapital.com/en/Advisor/Toronto/Toronto-Team/White-Papers

 

The blog used DLR as an example.  For BMO in particular, I would have to call in to execute the second half of the trade.  I wonder if I could avoid calling if I use a dual-listed security, e.g. Enbridge (ENB)?  Buy on TSX and sell on NYSE.. not sure how I can specify the exchange for this trade though - perhaps by specifying the settlement currency?

 

Yes, you can avoid the call if you use a dual-listed security at BMO. You can do both trades online.

 

Going from CAD to USD, pick two options when you sell:

 

Market: US

Settlement currency: US dollars

 

[gokou3]

I've used it too and saved $1000s. I suggest that you google it -- there is a blog that has details for each of the brokers.

 

I think this is the one you were referring to:

https://www.pwlcapital.com/en/Advisor/Toronto/Toronto-Team/White-Papers

 

The blog used DLR as an example.  For BMO in particular, I would have to call in to execute the second half of the trade.  I wonder if I could avoid calling if I use a dual-listed security, e.g. Enbridge (ENB)?  Buy on TSX and sell on NYSE.. not sure how I can specify the exchange for this trade though - perhaps by specifying the settlement currency?

 

Yes, you can avoid the call if you use a dual-listed security at BMO. You can do both trades online.

 

Going from CAD to USD, pick two options when you sell:

 

Market: US

Settlement currency: US dollars

 

Thanks.  Sorry for being slow, but just want to ascertain - let's say i am holding BEP.UN (traded on the TSX) and I want to sell it and cash out in USD.  I would put a trade to sell BEP on the US market and settle in USD, correct?  Supposedly BMO would know that BEP.UN/TSX and BEP/NYSE are equivalent?

[longlake95]

thanks for the feedback. Don't need specifics, as I am familiar with the maneuver. I had heard that some brokers were reluctant to do the e-journaling  - obviously to discourage the maneuver and make the spread.

 

Thanks

 

LL

[KCLarkin]

I've used it too and saved $1000s. I suggest that you google it -- there is a blog that has details for each of the brokers.

 

I think this is the one you were referring to:

https://www.pwlcapital.com/en/Advisor/Toronto/Toronto-Team/White-Papers

 

The blog used DLR as an example.  For BMO in particular, I would have to call in to execute the second half of the trade.  I wonder if I could avoid calling if I use a dual-listed security, e.g. Enbridge (ENB)?  Buy on TSX and sell on NYSE.. not sure how I can specify the exchange for this trade though - perhaps by specifying the settlement currency?

 

Yes, you can avoid the call if you use a dual-listed security at BMO. You can do both trades online.

 

Going from CAD to USD, pick two options when you sell:

 

Market: US

Settlement currency: US dollars

 

Thanks.  Sorry for being slow, but just want to ascertain - let's say i am holding BEP.UN (traded on the TSX) and I want to sell it and cash out in USD.  I would put a trade to sell BEP on the US market and settle in USD, correct?  Supposedly BMO would know that BEP.UN/TSX and BEP/NYSE are equivalent?

 

See also: https://www.milliondollarjourney.com/save-money-with-usd-to-cad-foreign-exchange-using-norberts-gambit.htm

 

[EliG]

I've used it too and saved $1000s. I suggest that you google it -- there is a blog that has details for each of the brokers.

 

I think this is the one you were referring to:

https://www.pwlcapital.com/en/Advisor/Toronto/Toronto-Team/White-Papers

 

The blog used DLR as an example.  For BMO in particular, I would have to call in to execute the second half of the trade.  I wonder if I could avoid calling if I use a dual-listed security, e.g. Enbridge (ENB)?  Buy on TSX and sell on NYSE.. not sure how I can specify the exchange for this trade though - perhaps by specifying the settlement currency?

 

Yes, you can avoid the call if you use a dual-listed security at BMO. You can do both trades online.

 

Going from CAD to USD, pick two options when you sell:

 

Market: US

Settlement currency: US dollars

 

Thanks.  Sorry for being slow, but just want to ascertain - let's say i am holding BEP.UN (traded on the TSX) and I want to sell it and cash out in USD.  I would put a trade to sell BEP on the US market and settle in USD, correct?  Supposedly BMO would know that BEP.UN/TSX and BEP/NYSE are equivalent?

 

Yes, if BEP.UN/TSX and BEP/NYSE have the same CUSIP.

 

Once you sell BEP on NYSE, you will see a long BEP.UN position in your CAD account and a short BEP position in your USD account. BMO system will cancel them out once the trade settles.

 

BMO may charge you margin interest for the short position, if you have a margin account. I remember reading reports to that effect on redflagdeals forum. You can call and reverse the charge later. Another option is to call BMO on T+1 and ask them to flatten out the long and the short on T+2.

[KCLarkin]

BMO may charge you margin interest for the short position, if you have a margin account. I remember reading reports to that effect on redflagdeals forum. You can call and reverse the charge later. Another option is to call BMO on T+1 and ask them to flatten out the long and the short on T+2.

 

My experience is that you are more likely to get hit with interest in RRSP/TFSA accounts. And the interest rates for non-margin accounts are very high. I'm not sure what triggers the interest charge but I suspect it might be using the proceeds to buy a different stock before the Gambit settles.

[EliG]

BMO may charge you margin interest for the short position, if you have a margin account. I remember reading reports to that effect on redflagdeals forum. You can call and reverse the charge later. Another option is to call BMO on T+1 and ask them to flatten out the long and the short on T+2.

 

My experience is that you are more likely to get hit with interest in RRSP/TFSA accounts. And the interest rates for non-margin accounts are very high. I'm not sure what triggers the interest charge but I suspect it might be using the proceeds to buy a different stock before the Gambit settles.

 

My last gambit at BMO, I used the proceeds immediately to buy a different US stock. I called them on T+1 and requested a journal. The long and the short were erased on T+2. There was no interest charge. That was a margin account.

 

[KCLarkin]

My last gambit at BMO, I used the proceeds immediately to buy a different US stock. I called them on T+1 and requested a journal. The long and the short were erased on T+2. There was no interest charge. That was a margin account.

 

Yes, I've never had an issue with Gambit in BMO margin account. And I never bother to call - just let things settle on their own. I have had interest charges in my RRSP.

[EliG]

Thanks.  Sorry for being slow, but just want to ascertain - let's say i am holding BEP.UN (traded on the TSX) and I want to sell it and cash out in USD.  I would put a trade to sell BEP on the US market and settle in USD, correct?  Supposedly BMO would know that BEP.UN/TSX and BEP/NYSE are equivalent?

 

Yes, if BEP.UN/TSX and BEP/NYSE have the same CUSIP.

 

Once you sell BEP on NYSE, you will see a long BEP.UN position in your CAD account and a short BEP position in your USD account. BMO system will cancel them out once the trade settles.

 

Just thought I would add a disclaimer. I've never used BEP.UN / BEP for a gambit at BMO. In theory, the pair should work if the CUSIPs are the same. In practice, there is a chance you may hit some odd issue in their trading system. Maybe call them to confirm if you already own BEP.UN.

 

I always gambit stocks that have the same ticker on both exchanges: TD/TD, RY/RY, etc.

[gokou3]

Thanks.  Sorry for being slow, but just want to ascertain - let's say i am holding BEP.UN (traded on the TSX) and I want to sell it and cash out in USD.  I would put a trade to sell BEP on the US market and settle in USD, correct?  Supposedly BMO would know that BEP.UN/TSX and BEP/NYSE are equivalent?

 

Yes, if BEP.UN/TSX and BEP/NYSE have the same CUSIP.

 

Once you sell BEP on NYSE, you will see a long BEP.UN position in your CAD account and a short BEP position in your USD account. BMO system will cancel them out once the trade settles.

 

Just thought I would add a disclaimer. I've never used BEP.UN / BEP for a gambit at BMO. In theory, the pair should work if the CUSIPs are the same. In practice, there is a chance you may hit some odd issue in their trading system. Maybe call them to confirm if you already own BEP.UN.

 

I always gambit stocks that have the same ticker on both exchanges: TD/TD, RY/RY, etc.

 

Thanks, this makes sense.

[StubbleJumper]

As a reminder, when people are executing a NG, do not forget about superficial loss rules.  For example, suppose you or your wife sold 100 shares of Royal Bank to crystallize a capital loss.  Then, without thinking, a few weeks later you decide to do a NG using the Royal Bank because it's a highly liquid interlisted stock.  Your wife's capital loss would then be refused by the CRA because you inadvertently re-purchased RY during the superficial loss period.

 

To avoid this, I try to pick a liquid, interlisted stock that I am pretty sure that neither my spouse nor I have owned recently.

 

 

SJ

[scorpioncapital]

I believe you can also skip between two classes of shares...for example some stocks have a A & B class which would be considered different, although economically would be almost the same to a small investor.