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What's your broker FX spread?


beerbaron
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I am a Canadian investor and I convert quite a bit of CAD to USD. I'm with Questrade for their low comissions and low monthlee fees but as my portfolio gets bigger it is starting to look attractive to consider currency conversion fees.

 

On my last conversion I calculate that Questrade made a spread between 1 and 1.5%.

 

What are other board member's brokerate spreads?

 

BeerBaron

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The spreads are usually pretty disgusting with the major brokers.  However, what is absolutely disgraceful is their lack of disclosure.  You have no idea how much they're skimming off your transaction until after it's already completed....and even then you're just making an educated guess.  I'd be much happier if they'd clearly disclose that they're bending me over for 1% or 1.5% instead of always being in the dark.

 

The sad thing about all of this is that the typical retail investor will get really fussed about the difference between an equity commission of $6.95 vs $9.95 or $19.95.  In reality, getting bent over for a single medium sized currency transaction swamps any equity commissions that I'll incur over the course of a year.

 

 

SJ

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The Cdn banks have all been sued in class actions for forex spreads on RRSP transactions. The result is that banks are now charging much fairer spreads however anyone who is dealing with an investment dealer or bank knows that they have a thousand ways to pick your pocket and they invent new ways every day. I laughed when commentators referenced Bernankes twist operation as being hazerdous to banks profitability as if they could not offset the loss in spread with other revenue streams. Was it not last month that a major New York bank started to charge for deposits over 10 million. A banker basically takes the atitude that every time you do ANYTHING with Your money it is going to cost you.

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On my last conversion I calculate that Questrade made a spread between 1 and 1.5%.

 

Consider using Norbert's Gambit.  Pick a crosslisted stock.  Say, Royal Bank.  Buy X shares in Toronto in CAD, quickly sell the same X shares in New York in USD.  CAD->USD for the cost of the commissions/spread/timing.  (Reverse for USD->CAD) 

 

Generally a good deal for larger amounts.  Welcome to the wide world of arbitrage.  :)

 

Depending on the broker, you may have to call them to make sure they journal over the shares from the CAD to USD account properly.

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On my last conversion I calculate that Questrade made a spread between 1 and 1.5%.

 

Consider using Norbert's Gambit.  Pick a crosslisted stock.  Say, Royal Bank.  Buy X shares in Toronto in CAD, quickly sell the same X shares in New York in USD.  CAD->USD for the cost of the commissions/spread/timing.  (Reverse for USD->CAD) 

 

Generally a good deal for larger amounts.  Welcome to the wide world of arbitrage.  :)

 

Depending on the broker, you may have to call them to make sure they journal over the shares from the CAD to USD account properly.

 

How can I sell on a different exchange then I bough at?

 

BeerBaron

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TD charges 1.5% between CAD and USD. TD Waterhouse can give you a better rate (below 1%) if you call them, but that's only for larger amounts (like 50k for example).

 

Anyone in Canada has a good way to converted between USD and CAD for smaller amounts (a few thousands)?

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With Interactive Brokers, you can make the currency trade like any other trade.  The commission is typically around one or two dollars (depending on the size of the trade), and the spread is tiny. 

 

For instance, I made a low six figure USD/CAD currency trade a few days ago.  The commission was $2.51, and the spread was something like 1.03165-1.03205.

 

Richard

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0.15% / transaction but EUR <> USD only.

 

1% and more is outrageous.  :o

 

Who's you broker?

 

https://www.binck.com/nl/corporate/

 

I think they only operate in Europe. Very basic so over time I'll switch to IB or something so I can buy warrants and options as well, not need for it now. The higher transaction costs actually help me being patient by not trading in and out to much.  ;D

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TD charges 1.5% between CAD and USD. TD Waterhouse can give you a better rate (below 1%) if you call them, but that's only for larger amounts (like 50k for example).

 

Anyone in Canada has a good way to converted between USD and CAD for smaller amounts (a few thousands)?

 

I was curious what BMO charges now, so last month I checked online.  BMO quoted me a one-way spread of 0.9% on 14,000 CAD->USD.  If you let them settle a fx trade automatically as a consequence of your order, (e.g. buy something on NYSE, but settle in CAD) then I think the spread may be higher (because who is really checking the spot rate at the exact time of the order, unless you settle the currency yourself).

 

Now I just arb anything over $10,000.  It takes me a few minutes but I do it because I dislike paying bank-owned brokers a fat spread on principle.  I find it particularly irritating when retail level small business bankers try to tell me that FX is a "free service... no charge".  They are either idiots or liars.

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It's true that the disclosure is horrible on FX spreads with canadian brokers. Nowhere in the sites you can find it. I'll have to call tomorrow and start arbitraging currencies trough dual listing stocks.

 

There is quite some differences in stock arbitrages. I took all the canadian listed companies on the NYSE and made a dynamic list. And one could see that Hudbay Minerals would actually bring an arbitrage profit. Which I find too good to be true... What should I be looking out for?

 

Minimum 1.18% HudBay Minerals Inc.

Maximum 3.99% North American Energy Partners Inc.

Average 2.96%

 

Current 1USD-1CAD= 3.04%

 

BeerBaron

 

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