CAD -> USD?

[pps]

Hello all,
I have a quick question. Sometimes I need to convert cad2usd and I would like to find some way to convert it with the best exchange rate possible.
Last week I converted 45K at my bank (rbc) and when I got home I decided to check what's the diff between current exchange rate and what I paid at rbc. The result was that they made more than 500$ on the exchange difference.

I read these forums and there is a long discussion about that (Norbert's gambit), but it's too long and I don't have an account to buy/sell stocks. I applied long time ago but still didn't finish registration of my account.

So, what I'd like to ask if there is some sort of way to get better exchange rate without any delays etc. In a couple of days I'll need to convert $35K more and I would rather give a few hundred bucks to the poor guy who opens the bank's door than to pay huge commission for nothing.

thanks, and happy Canada day!

[glennchan]

Trade with friends and family??

2- If you can't be bothered to go through with paperwork to save $500, I don't know what else you're expecting??

[pps]

I don't have any friends/family who have any us dollars.
Why do you say I can't be bothered? If there is no other way than through buying Canadian stock and selling it on US market for USD, then obviously I'll open stock account so that I'll be able to do it in the future. The thing is that I'll have to convert some money today/tomorrow and I asked if there is some sort of online exchange that offers better rate so that I could use their service

for stock buying selling, what's usually recommended? I signed up with rbc

[Pickles]

I don't have any friends/family who have any us dollars.
Why do you say I can't be bothered? If there is no other way than through buying Canadian stock and selling it on US market for USD, then obviously I'll open stock account so that I'll be able to do it in the future. The thing is that I'll have to convert some money today/tomorrow and I asked if there is some sort of online exchange that offers better rate so that I could use their service

for stock buying selling, what's usually recommended? I signed up with rbc

Well, you couldn't be bothered using one of the existing threads on US'CAD exchange. Instead, you started a new thread unnecessarily.

Second, if you can`t be bothered reading and learning from the existing info posted on the topic, why do you assume by simply asking your question in a new thread that you will get a different answer?

[arthur]

http://XE.com/ucc/

[Canadianinvestor10]

I use www.knightsbridgefx.com.

They have better fx rates than the bank and also XE. I've compared them to many brokers and I am very happy with the rates and service.

No hidden fees or commissions. They walked me through opening an account which was easy and were always available by phone, which was nice.

[Norbert Schlenker]

What are their spreads like on spot trades? Say on $100k? WIll they even do smaller business, like a $10k exchange?

[big easy]

What are their spreads like on spot trades? Say on $100k? WIll they even do smaller business, like a $10k exchange?

Minimum is $10k. They claim to save you 1% over the banks, so I'm guessing you're still paying 1%. You have to phone for a quote. On the upside, they have an office in Toronto.

[newguy]

http://www.canadiancapitalist.com/horiz ... tsx-dlr-u/

Investors who have CAD and USD accounts with a broker and want to convert their loonies into greenbacks will buy units of DLR using Canadian dollars. They will then sell DLR.U and when the trade is settled, they will receive the proceeds in US dollars.
....
Note that unlike the Norbert Gambit with inter-listed stocks, investors are taking zero market risk when trading DLR/DLR.U.

I wonder how this will work in a TDWH RRSP.

newguy

[IdOp]

Thanks for the tip on DLR, newguy, didn't know about it, that's interesting. One problem with this method would be liquidity. Another thing I'm not sure of: does the TSX still support U$ trading with the .U suffix? I had a vague idea that they'd abandoned that due to lack of interest. When I try to get a quote on DLR.U at TD-W it says the symbol is invalid.

On a related note, I had been thinking a low-risk, slow, Norbert gambit would be possible using something like

FXC - Rydex CurrencyShares CDN $ ETF

BIL - SPDR 1-3 month T-Bill ETF

or

SHV - iShares short-term bond ETF

provided they were interlisted (and had sufficient liquidity). Of course, the problem is they currently are not interlisted.

ADDED: See this post about the likely abandonment of U$ trading with a .U suffix on the TSX.

ADDED #2:The Horizons page describing DLR is here. There is no mention of DLR.U trading. Also couldn't find "DLR.U" in the prospectus (linked on that page). I strongly suspect Cdn Capitalist is mistaken. It does seem you can get a large number of U$ out of this by redeeming a sufficient quantity of ETF units:

* Ability to redeem DLR for USD proceeds in increments of $250,000

That would be 25,000 units at U$10 per unit, I s'pose.

[newguy]

I strongly suspect Cdn Capitalist is mistaken.

Maybe, but he said it starts today. I don't even get the concept, buy USD with your USD . The only purpose seems to be for exchanging currency.

newguy

[Bylo Selhi]

The only purpose seems to be for exchanging currency.

There's also the suckers who buy it to hold cash, not realizing that they're paying a 45bp management fee (55bp MER?) for the privilege.

[IdOp]

I strongly suspect Cdn Capitalist is mistaken.

Maybe, but he said it starts today.

It's my bad, I didn't read his posting carefully enough. Indeed, quotes on DLR.U are available today at TD-W. Apologies for the confusion.

Will have to check out the Horizons site again and find where it's mentioned.

[Shakespeare]

My guess is that a high-volume interlisted will still be cheaper because of narrower bid/ask spreads.

[IdOp]

My guess is that a high-volume interlisted will still be cheaper because of narrower bid/ask spreads.

Probably, although for many the lowered risk may be significant. In the quote I got this morning the bid-ask spread for both DLR and DLR.U was 2 cents. This may not be typical, perhaps Horizons is arbitraging it well on its debut, who knows.

I do think however it would have been better if they had pegged this at U$100 instead of U$10. That would allow spreads to go lower if possible. Even at this morning's quote, 2 cents on U$10 is 20 basis points ... not terrible at all, but if someone is willing to arbitrage it more cheaply than that, U$100 would let them. In the US, FXC is ~ $100 for example.

[IdOp]

Here is the Horizon's page for DLR.U. The CUSIP is the same as for DLR, and the page indicates the suitability for Norbert's Gambit fully on the TSX. Will be interesting to see if good liquidity is maintained. The low-risk factor might be good for someone doing this for the first time. Thanks to Canadian Capitalist and newguy for spreading the word on this.

[Bylo Selhi]

Here is the Horizon's page for DLR.U.

From the above page:

Note they show $45 for annual Management Fee. But someone who's using this security to do an immediate FX conversion wouldn't even have to hold it for one day, so they shouldn't be liable for any management fee, let alone for a year's worth. What am I missing?

P.S.
1. Horizon should recruit Norbert to be their spokesperson
2. Norbert should have been able to get a patent on NG. I wonder how much that would have been worth to Horizon?

P.P.S. Hopefully promotion like this, this and this will keep liquidity high and spreads low.

[adrian2]

In the quote I got this morning the bid-ask spread for both DLR and DLR.U was 2 cents. This may not be typical, perhaps Horizons is arbitraging it well on its debut, who knows.

I do think however it would have been better if they had pegged this at U$100 instead of U$10. That would allow spreads to go lower if possible. Even at this morning's quote, 2 cents on U$10 is 20 basis points ... not terrible at all, but if someone is willing to arbitrage it more cheaply than that, U$100 would let them. In the US, FXC is ~ $100 for example.

ISTM that the quote on DLR.U will be "permanently" bid $9.99, ask $10.01. After all, it's like exchanging twenties for tens. So one way to save a few bucks when doing the NG with DLR, would be, when required to buy /sell DLR.U to bid /ask $10 even, and keep the trade active for 30 days or so. Even if the trade takes a few days or weeks to execute, you bear no risk at all by waiting (ignoring the few pennies in interest you might have earned on "real" US$. Eventually, your bid/ask will be hit by somebody doing the NG the other way around.

[IdOp]

ISTM that the quote on DLR.U will be "permanently" bid $9.99, ask $10.01. After all, it's like exchanging twenties for tens. So one way to save a few bucks when doing the NG with DLR, would be, when required to buy /sell DLR.U to bid /ask $10 even, and keep the trade active for 30 days or so. Even if the trade takes a few days or weeks to execute, you bear no risk at all by waiting (ignoring the few pennies in interest you might have earned on "real" US$. Eventually, your bid/ask will be hit by somebody doing the NG the other way around.

That's a great idea to keep in mind. A couple of risks with that could be (a) if the trade takes a long time then the exchange rate may move out of a range you're happy with, or you may need the money; (b) if you're converting a large amount, you may get partial fills on several days and commissions add up. But depending how much DLR.U trades it could work well also.

[IdOp]

What am I missing?

Not much for a currency conversion I think, even for a 3-day hold for us slow-pokes.

It may be the same table as for DLR, the primary marketing purpose of which (AFAICT) is for currency speculators/hedgers[*], who might hold it for a longer time hoping things go their way. A year's hold may be a long time, but for that you'd have to include the MER so maybe they're doing a "bad-if-not-worst" case?

[*] Note above the table Horizons' liberal use of the word "invest".

[big easy]

So you still have to call your broker and ask them to sell your DLR as DLR.U (or journal over to cancel the short)? Can they refuse?

[IdOp]

So you still have to call your broker and ask them to sell your DLR as DLR.U (or journal over to cancel the short)?

If journaling is involved (with or without short) I imagine a call to the broker is necessary. Apart from journaling, it's a good, and open, question I guess how well various brokers' systems will be set up to handle this, since it's kind of new.

As one example, suppose you buy DLR in the C$ sub-account (say, TD-W), wait to settle and call to journal to the U$ sub-account. Now you want to sell it as DLR.U. Does the system know this can be done for what you own? If not, it would be another call to an agent, ask them to place the order on the TSX, convince them it's the same security, ask for the online commission.

Until we get some experience of people having done it with DLR/DLR.U, we won't know for sure how different brokers systems handle it. If someone's going to be a guinea pig, it might be a good idea to call the broker beforehand and ask for confirmation of what is expected to happen.

Can they refuse?

In the real world anything's possible. I can think of no good reason for them to refuse, it should go smoothly.

If you get a poor-quality agent who refused, escalate. Or call back and talk to another agent.

If they can't do it because their system has some kind of "Houston, we have a problem" with this, then consider switching brokers.

[Big Bob]

I have been watching this one and I think I have spotted the flaw - DLR appears to be very thinly traded. I only have data for the TSX so if it trades elsewhere I might need to re-think this but it can go days without a trade.

[newguy]

I have been watching this one and I think I have spotted the flaw - DLR appears to be very thinly traded. I only have data for the TSX so if it trades elsewhere I might need to re-think this but it can go days without a trade.

It doesn't matter, it's the 2¢ spread that matters. Right now there is $100k at the bid and ask (and the US is closed).

newguy

[StuBee]

Rather than create a new thread, I decided that I would hijack this one...

To all of those (us) who are long "anything other than Canadian" is it not refreshing (or even uplifting) to see the direction that the "Flying Loonie" has been taking recently. It is a comfort in all of the financial turmoil.