The traditional Norbert Gambit takes advantage of inter-listed Canadian stocks (RIM on the TSX and RIMM on NASDAQ, for example) but many investors find that discount brokers sometimes balk at journaling shares to the US account and selling shares right away. This would mean a wait of three trading days for the initial trade to settle and another two business days for the shares to be journaled over and taking on market and securities risk during the waiting period.

Recently, Horizons BetaPro introduced the US Dollar Currency ETF that trades on the TSX under the ticker symbol DLR. DLR is a currency ETF that simply holds US dollar cash equivalents and trades in Canadian dollars. Horizons BetaPro then followed it up with a US dollar denominated version of the same ETF that also trades on the TSX under the ticker symbol DLR.U. The combination of DLR and DLR.U allows investors to execute a Norbert Gambit and convert Canadian dollars into US dollars or USD into CAD at a very low cost without taking on any security risk.

Here’s how you can use DLR to convert Canadian dollars into US dollars.

1. Get a quote on DLR after logging in to your discount broker. Make sure that the bid-ask spread is 2 cents.
2. Since DLR has very low volume put in a limit order at the current ask price.
3. Wait for the trade to settle (T+3 days). Call your discount broker to journal DLR to your US investment account.
4. Wait 2 business days for the shares to get journaled over.
5. Get a quote on DLR.U. Make sure that the bid-ask spread is 2 cents.
6. Put in a limit order at the current bid price.
7. When the trade is executed, you’ll have converted CAD into US dollars.

To convert USD into CAD, investors would purchase DLR.U in their US investment account and sell DLR in their CAD investment account. The typical discount broker charges 1.5 to 2 percent on currency conversions. Norbert Gambit with DLR/DLR.U will cost an investor just two trading commissions plus 2 cents spread per share.

Here’s a concrete example from a recent currency conversion I did in my TD Waterhouse account.

Purchase 500 shares of DLR at $9.75.
Sell 500 shares of DLR.U at $9.99.
Result: $4,885 CAD converted into $4,985 USD.
TD Waterhouse retail exchange rate: $4,885 CAD converted into $4,943 USD.
Total Savings: $42

Update #1:
The low trading volume of DLR/DLR.U is not a concern because ETF vendors (Horizons BetaPro in this case) typically work closely with market makers to ensure tight bid-ask spreads.

Update #2:
When you journal DLR over to the US Dollar account, the ticker symbol may remain the same. However, you will be able to put in a sell order for DLR.U. Don’t forget to note down the bid price of DLR because the difference between your purchase price and sell price in Canadian dollars should be declared as capital gains or losses in your taxes.

Update #3:
Here’s another example of a currency conversion with DLR/DLR.U:

Buy 700 DLR at $9.75.
Sell 700 DLR.U at $9.99
Result: $6,835 CAD converted into $6,983 USD.
TD Waterhouse retail exchange rate: $6,835 CAD converted into $6,901 USD.
Total Savings: $82

This article has 136 comments

  1. This is really good!

    I wonder if TD has lowered their exchange rate fee – I would have thought you’d have saved more than 0.8%.

    I’ll have to try this with Questrade and see how it goes.

    • @Mike: The cost of exchanging currency with DLR/DLR.U is more or less fixed. In this example, my expenses were $20 for the trading commission and $10 for the bid-ask spread or 0.6%. TD Waterhouse typically charges 1.5% for the exchange which agrees with the 0.85% estimate here.

      If we exchange more dollars, the savings would be more. Example. Cost to exchange $10K with DLR/DLR.U would be $40 ($20 for the bid-ask spread and $20 for the trading commissions). At TDW, it would be $150. The total savings would be $110 or 1.1% of the exchange value.

  2. Wow. That is a significant savings. I assume you can do it backwards to buy Canadian Dollars with the US currency? Could this be a good method to make gains on arbitrage?

    • @JP: Yes you can buy DLR.U first and later sell DLR to exchange US dollars into Canadian dollars. I’m not sure I understand your comment about arbitrage. The exchange rate would be pretty close to the spot rate (actually ETF NAV in this case), so there won’t be any opportunity for retail investors to make arbitrage profits.

  3. Yes but will this work in an RSP, where most of us have our savings? I’m with Scotia iTrade and I don’t have a USD RSP

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  5. So… how does this work with RBCDI and other brokers where you can hold US and CAN in the same account?

    I guess I don’t even need to do this – buy DLR using CAD, then immediately sell it choosing to receive the results in USD? Am I missing something?

  6. @DM: I’ll find out about iTrade but the Norbert Gambit in a RRSP account at TD Waterhouse is supposed to not involve any journalling. i.e. one would buy an inter-listed stock and sell it right away. Example. Buy POT on the TSX and sell POT on the NYSE.

    @Sean: The method should be exactly the same in taxable (non-registered) accounts at any other broker. For RRSP accounts at RBC DI, it should also be exactly the same because you can separate CAD and USD RRSP accounts at RBC DI.

  7. @CC, I wasn’t very clear. Would this be a good option to make money by currency trading? ie buying USD when the CAD is high and selling USD when CAD is low?

  8. @Canadian Capitalist, I guess that’s my confusion, as I only have one RSP account, but when I purchase I can choose to purchase using US or CAN funds, and when I sell a security I can choose what currency to settle it in. I can hold both US and CAN funds within the same account.

    I guess because I don’t trade US securities in that account (I use OptionsXpress for that) I have not tried any of these transactions yet. I’ll have to call them and confirm, and maybe test one out to make sure I know how it works.

  9. Very useful post (as always!). Just a minor point, but TD Waterhouse Canada actually charges 1.4% over spot for USD exchange. It’s been this way for a while.

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  11. We investors shouldn’t be content paying high currency exchange fees.
    This method is definitely the way to go when performing currency exchanges.
    Another great post, CC!

  12. Just spoke to my broker BMOIL about doing this in an RRSP (where the broker does not allow USD cash to be held) – sell a USD holding, say SPY and buy a CAD holding, say XIU using this method.

    Was told this is how they would do it:
    Day 1 – sell SPY, buy DLR.U for same USD net amount, then phone BMOIL and ask to sell it as DLR = CAD settlement, then buy XIU for the same net CAD amount with new CAD
    Day 4 (T+3) – the dust all settles automatically
    The big difference is that the phone call trade of DLR goes at the much higher broker-handled rate of $43 (yikes) so obviously the economics work starting at amounts over $5k.

  13. Hi CC–
    Thanks for another helpful article. I tried using this product in my RBC DI Practice Account– RBC doesn’t seem to be trading it yet. I received the following message when I tried to sell DLR.U:

    “We are unable to accept an electronic order for this symbol at this time. To place an order for this symbol, please contact your RBC Direct Investing Inc. Investment Centre.”

    A question for you: does this instrument offer any benefits over the “traditional Norbert’s Gambit” where one might use a stock like RIM or Potash? Is the benefit that the spot rate is better?

    Any disadvantages? Perhaps the 2 cent spread versus a penny spread? I imagine the MER is a non-issue if you’re buying and selling DLR right away?

    Thanks again!

  14. @JP: Technically, the answer is yes. An investor who believes CAD is overvalued could buy and hold DLR. However, trading currencies is a tough way to make profits.

    @Sean: The following post suggests that gambitting with any stock should already be automatic at RBC DI:

    Just buy RY on TSX, sell RY on NYSE and after settlement, you should have USD in your USD side of the account. I can’t test this out because I don’t have an account myself.

    @Viscount: Here are the numbers that TDW quotes for a $5K conversion right now:
    Sell rate: 1 USD = 0.9924 CAD
    Buy rate: 1 USD = 0.9608 CAD
    The spread at this time seems to be around 1.6%. I’ve seen this fluctuate around 1.5%. I’ve even seen as high as 1.9%.

    @avrex: Yes, currency conversion is a huge profit center. We should try and avoid it as much as possible, especially the most usurious ones that force the conversions in RRSP accounts.

    @CanadianInvestor: BMOIL should really be offering wash trading. It is ridiculous to gambit just to avoid the forced conversion.

    @BC_Doc: It appears you can automatically do a regular gambit with any inter-listed stock at RBC DI. i.e. Buy POT in TSX, immediately sell POT on NYSE. When the trade settles, CAD will be converted into USD. If I can do that at TDW, that’s what I’d do.

    The only advantage of using DLR/DLR.U is completely avoiding market risk even the minimal one of selling the shares right away. I don’t think the spot rate will be better. In fact, the spread might be much lower on a very liquid stock such as RIM which typically has a spread of just 1 cent. A 1 cent spread on a $45 share is much lower than a 2 cent spread on a $10 share. Still, the bid-ask cost with DLR is rather modest.

  15. @CC: Keep in mind that spot rates for bid and ask are different; the currency conversion rate is not calculated based on the midpoint rate.

  16. Thanks for your reply CC. I think I’ve pieced together the differences between Norbert’s Gambit and the Horizons BetaPro product. Unlike NG where I take my shares of RY that I just bought and immediately sell them on the NYSE, with this new product I would buy DLR in Canadian dollars on the TSX and then immediately sell DLR.U on the TSX with settlement in USD. There is no US stock exchange involved in the conversion.

    It looks like the cost of converting funds using this product is approximately 0.4% plus two trade fees) (2 cents per share in bid-ask spread when you buy DLR at approximately $10/share plus another 2 cents per share in bid-ask spread when you sell DLR.U). So, it’s not as cost-efficient as Norbert’s Gambit but it’s still better than the 1.25-1.50% that the currency desk charges to convert dollars.

    Thanks again for another fine column!

  17. @ CC
    @ Sean
    RBC DI works exactly as described in Christina’s blog. I already did it, earlier this year. It settles after 2 days.

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  20. Has anyone tried this with TD Waterhouse recently? I spoke to a TDW rep today and was told that they will not journal shares between your CAD and USD accounts if it is a ‘regular’ occurrence. Since this was my first time, the rep went ahead with my journal request (DLR from my CAD to USD acct). But now I don’t know if I’ll be able to do this again anytime soon. Looks like this has already gotten too popular and TDW is looking to clamp down.

  21. @FirstTimer: That’s not good news though I journalled some shares just the other day and did not encounter any problems. If TDW tried to pull that trick, I’ll tell them to expect a Transfer Request from a competing broker shortly. It is only at TDW that one has to jump through hoops to do a Norbert Gambit. At brokers such as RBC DI and BMO, the gambit is supposed to be automatic. I’d be extremely displeased if TDW tried to pull that trick on me.

  22. How do I properly convert the US currency to Canadian currency using my TD Waterhouse non-rrsp account?

    Should I:
    1) Log into WebBroker, and select my US Brokerage Account
    2) From the US Brokerage Account, Purchase the DLR.U from the “CA – Canadian market” using my US dollars?
    3) Call TD and ask them to journal the DLR.U entry over to the Canadian Account
    4) Wait for the DLR.U/DLR, (whatever the entry ends up changing to) to migrate and settle over to the Canadian Brokerage account.
    5) Sell the DLR.U/DLR from the Canadian Brokerage Account, cross fingers and hope the funds settle in Canadian dollars?


  23. Thanks CC, this is a great post on gambit

  24. Has anyone successfully implemented this gambit in a Questrade account?

    I tried to get confirmation that they’d journal DLR to DLR.UN, but the “official” response was:

    > Unfortunately this cannot be done.
    > DLR and DLR.U are two different stock.
    > Only interlisted stock can be journaled.

  25. @Erick: Is Questrade able to journal DLR to the US side of the account? If they can, then you should be able to do a journal and sell DLR.U on the US side of the account. I’m talking theory here because I don’t have a Questrade account. Here’s what happens at TDW:

    I journal *DLR* over to the US side. I wait for the journal to be completed (typically 2 business days). In my US account, my holding still shows DLR. I sell DLR.U on the US side of the account in the Canadian market. DLR.U settles in US dollars, so after the stock settles, I have USD in my US account. As I mentioned in this post, I’ve done this a couple of times already and it works as advertised. I see no reason why it shouldn’t work at other discount brokers.

  26. @CC: I see no reason why it shouldn’t work either.

    The question I asked Questrade was…is the following set of transactions permitted?

    1. Buy DLR.TO today
    2. Contact Questrade tomorrow to journal DLR.TO over to DLR.U.TO
    3. Wait 1-2 days for the shares to be journaled over
    4. Sell DLR.U.TO

    Without independent confirmation from another Questrade client, it’s difficult to determine if the response I received is accurate or just a case of “when in doubt, say no” from a junior support agent.

  27. @Eric: Is Questrade able to *transfer out* *DLR* to the USD account? It doesn’t even have to appear as DLR.U in the US side. You can then try selling *DLR.U* once the transfer is completed and DLR is available to sell in the US account. I’m guessing this should work but it’s only a guess. I don’t *know* that it will.

  28. Journal DRL to US account as DRL, not DLR.U. but put sell order in as DLR.U and it should go through. it worked for me @ TDW.

  29. Cheaper just to open an Interactive Brokers account and convert currencies there.

  30. CC, I’d appreciate it if you can add a step-by-step USD->CAD in the main post as well

    I know you have a paragraph there saying to buy DLR.U and sell DLR… but I think it’ll be awesome if it can be broken down into steps and clarify for your readers (like me)

    I assume we also buy on the “ASK” price, and sell on the “BID” price

  31. Sorry CC, I just want to clarify, because now I got myself a bit confused

    Is DLR/DLR.U same-day transaction? or T+3+ journal (so 5 days at least)?
    e.g. if I need $10K converted right away, DLR won’t work?

    I originally thought we can buy DLR.U in US Margin, and sell DLR in CAD margin, and call in to journal over, on the same day..

    or is DLR always delayed, and therefore taking currency risk in these 5 days?

    • @Jerry: No. DLR/DLR.U process outlined here takes at least five business days (T+3 plus another 2 days for journalling). If an investor is willing to pay a bit more, TDW is supposed to execute a traditional Norbert Gambit for the price of one WebBroker and one phone commission. In the traditional NG you would have access to the funds for immediate trading but if you want cash, you’ll have to wait for the trade to settle.

      If you have a margin account, I suppose you could buy DLR and also buy US stock for equivalent USD in the US side of the account. You could then wait for the trade to settle another couple of days to journal over and sell DLR.U and use the proceeds to pay back the loan. You would be charged interest on the margin loan though. Of course, this is theory and I haven’t done this myself.

  32. So I decided to throw caution to the wind and try this gambit in my Questrade account:

    1. I received confirmation from Questrade’s risk department that this was a valid set of transactions
    2. I placed the order to buy DLR on Aug 9th
    3. I requested it be journaled over to DLR.U on Aug 10th
    4. Questrade said that it wasn’t possible because the stock was not interlisted, at which point I reminded them about Step #1
    5. On Aug 12th, Questrade indicated that they needed to make changes to their backend system because DLR.U was not showing up as an alternative symbol for DLR
    6. On Aug 16th, Questrade journaled the stock and I placed a sell order at $10.01
    7. The sell order wasn’t filled and overnight DLR.U flipped back to DLR
    8. I requested it be journaled back on Aug 17th and placed a sell order at $9.99
    9. Success!

    The end result is that if you’re thinking about doing this with less than $25K, don’t bother. I saved about $110 after subtracting the trading costs and bid/ask spread from the 75 pips Questrade would have charged to convert it for me.

  33. I tried this with Scotia iTrade. It works, but because DLR and DLR.U share the same CUSIP, the final step of selling DLR.U can only be done on the phone with a trader; the iTrade website can’t handle it. They will only charge the web commission though.

    The journaling process can be completed online. In iTrade, go to Accounts -> Account Services -> Securities -> Transfer Securities Between Scotia iTRADE Accounts. It still takes three days for this part to be completed.

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  35. Yesterday, I tried to sell the DLR.U but I noticed that the bid ask was 9.96 to 9.98. Why would this not be 9.99 bid to 10.01 ask (which I saw in the past and used in all the above examples)? It’s a US dollar ETF trading in US dollars!

  36. According to the Horizon website, the management expense for DLR is 0.45%.
    The total management expense ratio is probably slightly higher than this.

    How does this MER (%) affect this strategy to convert currencies?

    Can anyone comment on this essential question – how are the ETF management expenses charged?
    On purchase of the ETF? Monthly? Daily? I haven’t been able to get a straight answer on this, but this is
    important to understand, to see if this strategy really makes sense. Presumably the MER (%) is pro-rated, so that if it is charged daily, that it would be 0.45%/365?

    • @Brian: You are correct in your guess on how MER is calculated. It is calculated as Assets under management*MER / 365 and charged daily. So, if you hold 100 shares of DLR valued at $10 for 10 days, it will cost you 12 cents. ($10*0.0045*100/365*10)

  37. Is using DLR.U a safe bet when looking to trade a higher amount?

    I need to trade about $20K am worried about the volume of DLR.

    I have US funds that I need to convert back to Canadian in my TDWH RRSP. Since it’s within my RRSP I can buy DLR on the NYSE and then immediately sell on the CDN side.

    Do I need to do anything else after I’ve done the sell?

    I recall when doing Norbert’s Gambit to get the USD, I had to call in and do a wash after the purchase of U.S. securities so I could avoid the exchange fees. (This step may have been required since I was doing it in my RRSP and the journal over step was not required)

  38. when I talked to TDW rep, I was told that DLR/DLR.U gambit is possible only in no-registered accounts and I cannot perform it in RRSP. Is it true?

    If yes and If I want to buy into TDW RRSP US stock, in order to get US cash and not to pay FX fees, can I first buy for example BMO.TO, sell the same day BMO.N -> as I have US$ wash set , money from sell should go automatically to US MM, and than buy with this US MM US stock?

  39. I just did my first NG today through RBC Direct Investing using Christina Normans blog post listed above. I spoke with a representative to get what the conversion rate would be if I did it through him which was 1.0272. I don’t know exactly what the institutional rate was but it would have been around 1.0114. I also asked the rep if I was able to buy POT:TSX and sell POT:NYSE on the same day right after each other just to make sure and he said “yes”. I was really happy with how it all went even though I was super nervous about it. I just have to wait for it to settle now as my accounts look all messed up. But I was able to convert $19,435.50 CAD into $19,280.46 USD (1.0080). It would have been $18,920.85 @ 1.0272. A savings of $339.71 (including 2 commissions) or a difference of 1.75%!!! Thank you CanadianCapitalist, CanadianCouchPotato, and Christina Norman for all the info.

    TL;DR – I saved 1.75% on a Norbert’s Gambit using RBC Direct Investing and POT.

  40. CORRECTION: I should have said $19,516.00 CAD to $19,280.46 USD (1.0122). Savings of $261 after commissions not $339. Also, the percentage is wrong. Next time I’ll try and not be so excited and double-check my work.

    TL;DR – Actual NG savings was $261 (or 1.34%) and I need to work on my math.

  41. FYI: At ScotiaITrade there is now no trading fee on the DLR part of the process apparently.
    So that should half the commission portion of the cost.

  42. I converted C$ to US$ with DLR/DLR.U at Scotia iTrade. While I bought DLR on my own and wasn’t charged for the trade (since DLR is on iTrade’s list of free-trade ETFs), iTrade’s platform didn’t allow me to sell DLR.U on my own. I had to sell DLR.U with a trader (that clearly hadn’t done it before) on the phone and I was charged $9.99. I thought DLR.U was also a trade-free ETF, but it doesn’t seem to be the case.

    • @Steve: I’m surprised Scotia iTrade wouldn’t allow you to trade DLR.U. I don’t have a problem at TD Waterhouse (I’m assuming that you tried to sell DLR.U in the USD account on the Canadian market).

      IMO, Scotia iTrade should allow you to trade DLR.U commission-free. DLR and DLR.U are the same security, so it is bizarre that DLR is commission-free and DLR.U is not. Thanks for bringing this to my attention. I will check with Horizons and ask them why DLR.U trades are charged a commission.

  43. I attempted this unsuccessfully with BMO Investorline on Mar 22 2012. Starting with $C, I purchased DLR at the ask price without any issues, and then called them to journal DLR over to the US side of the account as DLR.U. They told me it was no problem to do that. After a day, it appeared as though they had journaled it over the US side of the account but it still appeared as DLR, not DLR.U. I tried selling DLR.U but their online trading system did not recognize the symbol, and when I called the representative told me that their system was not set up to handle DLR.U, regardless of whether I did it myself or called in. He checked with his supervisor and confirmed that it was not possible, at least at that time. Disappointing. I’d be interested to hear if anybody else has had recent successful or unsuccessful experiences doing this with BMO InvestorLine.

  44. Hello – I purchased DLR (about $12,500 worth). Now, the price of DLR (purchased at 10.36) has gone down to 10.20 as the exchange rate has gone from about 0.96 to 0.97. If my intention with this purchase was to simply convert to DLR.U and sell and obtain US$ from Cdn$, does the drop in Cdn price of the ETF matter? I see that there is some fluctuation in DLR.U but not as much. Does DLR.U change based on exchange rates, or simply DLR? I guess, to summarize what I’m asking, have I basically locked in the exchange rate at the time or purchase of DLR (if I’m converting to US$) or does the continuing change in exchange rate have an impact on how much I get in US$ until I convert into DLR.U and sell? Thank you. And BTW, I should have done more research before buying but I still could end up about $70 ahead by doing it this way rather than exchanging with the banks. That does depend on the answer to my question though!

  45. @Paul: The value of DLR will fluctuate based on the CAD-USD exchange rate but DLR.U will be relatively static. When you exchange CAD into USD, you will be buying DLR first and selling DLR.U later. At the time of buying DLR, you have locked in the exchange rate.

    1 CAD = 1.00 USD
    value of DLR.U = $10
    value of DLR = $10

    You buy 100 shares of DLR. It would cost you $1,000.

    5 days later
    1 CAD = 0.95 USD
    value of DLR.U = $10
    value of DLR = $10.52

    You sell 100 shares of DLR.U. You have $1,000 USD in your brokerage account. Notice how the current value of DLR has no effect on your conversion. Your exchange rate was the ratio of DLR / DLR.U when you initially bought DLR.

    Note that if you go the other way, i.e. exchange USD into CAD by buying DLR.U and then selling DLR, you are exposed to currency risk.

  46. Thank you very much for your reply. That puts my mind at ease and now I have no panic regarding when to make the exchange to US$. This makes it easy, although it would have been nicer if I had it at a better exchange rate (a couple days later!). But, still saved money doing it this way than by the bank. Thanks!

  47. @Erick (or any other Questrade client)
    You last posted on August 18, 2011, so how have the last 10 months been dealing with Questrade in regards to your CAD/USD converting? Do you have any recommendations?

    Can you give a numerical example of a transaction with Questrade; one that would include initial amount, spread, fees, and final amount?

    Thanks !!!

  48. CC: I’ve been following this page with interest…have you found any new information on the DRL.U spread differing from an expected 9.99 USD amount?

    “November 10, 2011 at 11:38 am
    @YTrader: I’m going to let Horizons know about this. I see that the bid-ask spread currently on DLR.U is 9.96 to 9.98 as well.”

    • @Nick: Last I checked (a few weeks back), DLR/DLR.U spreads were really tight… just 2 cents.

      The reason DLR.U value is lower than $9.99 has to do with the low interest environment we’ve been stuck in for a while now. DLR.U has a MER of 0.6% or so and its holdings (USD cash equivalents) pay next to nothing these days. Therefore, its value has been slowly decreasing. However, this should not be a concern because those exchanging currency will be holding DLR.U for only a week or so. Hope this helps.

  49. @Que: I’ve done two more conversions since my last post:

    1. Open account
    – purchased 1,300 of TD.TO @ $78.794 with commission of $14.50 CAD on 16-FEB-2012
    – sold 1,300 of TD @ $78.871 with commission of $11.92 USD on 16-FEB-2012
    – estimated savings based on 1.15% currency commission ~ $1,150
    – I was a little hesitant doing a proper gambit for the first time with such a relatively large amount, but the only snag I ran into was that I had to contact Questrade the following week to flatten the positions showing in my account

    2. RRSP account
    – purchased 2,520 of DLR.TO @ $9.94 with commission of $10.02 CAD on 27-FEB-2012
    – sold 2,520 of DLR.TO.U @ $9.94 with commission of $18.77 USD on 01-MAR-2012
    – estimated savings based on 0.8% currency commission ~ $160
    – the journaling process was far easier and faster compared to my first attempt

  50. Just curious if anybody has had success doing this with BMOIL recently? I was surprised when I tried this that the rep said that they were not set up to handle DLR.U. I even had him check with his supervisor who confirmed this.

  51. Peter ZQ, just did this at the beginning of July through BMOIL and it went through fine. It wasn’t automated but the rep I spoke to on the phone handled the DLR.U sale (after my purchase of DLR) without any problems or objections.

  52. Why bother. I can do the same on or and get the exchange at the current forex rate. You can do it for all currency not necessary Can and US. I did it last month. I converted Euro to candian dollars. I end the wire on friday (actually my bank did) and on Tuesday the money was back in Canada with the saving over 600 dollars vs converting it at the bank. The only fees was wire charges (sending it) and it was only because you cannot use e-transfer for Euro in Canada, and no charges for deposit in Canadian dollar account. Before using forex the bank used to chage me $15 can for “the privilage” of depositing money into my own bank account. That $15 is a standard fee charge by all banks in Canada. K.I.S.S, principle applays here – “keep-it-simple-stupid”.

  53. @Jerzy – You need to understand that XE (and banks, brokerages, credit card companies, etc.) make money on foreign exchange and this is usually hidden from the consumer. The profit is found in the “spread” which is difference between the exchange rate they charge you and the real exchange rate. So, even though you believe XE did not charge you any extra fees, if you were to compare the rate they charged you with the real exchange rate that day you’ll find that they earned a bit of profit from you. (It’s not like they’re doing this for free!)

    Your statement that you can “get the exchange at the current forex rate” at XE is not true.

    You are correct that Norbert’s Gambit is a lot of work and it is only worth it for a minimum transaction amount. I don’t know what XE’s spread is but with a sufficiently large transaction (think tens of thousands of dollars) I think the Gambit can come out ahead.

    So, why bother? For those of us with larger portfolios and want to invest in USD denominated investments, minimizing the spread can result in significant savings.

    Yes, if you only want $200 to go cross border shopping then the KISS rule would apply and you should just go to your local bank and pay a spread of 3-4%.

  54. Received a suprisingly different answer from TD Waterhouse for CAD to USD conversion in my non-registered accounts:

    “As long as there are Canadian funds in the Canadian account, there should be no issue with the trade. Note that a short position in a cash or margin account may prevent you from placing other trades even if the shares are going to be journalled. Basically, purchase the shares first, sell the shares second and call to make the journal request. Steps 2 and 3 can be reversed.”

    “Journal request take between 24 and 48 hours to complete (not including weekends or holidays). If you request the journal immediately after the trade, the journal will occur prior to settlement which will leave your account in good standing. There are no commissions or fees charged for journal requests. There is no way to complete a journal instantaneously.”

    It means that there is no price change risk since I am able to buy and sell immediately. Journalling will happen before settlement and all is well.

    Is this a recent change? Previously immediate sell (hence avoiding price change risk) could only be accomplished by calling in and paying the phone trade commission.

  55. I’m half way through a Norbert Gambit “test” using iTrade with the DLR/DLR.U stock. I’ve successfully purchased DLR within my CDN$ account, had the shares journalled to my USD$ account after settlement, and would now like to sell the DLR.U shares from my USD$ account. As the shares show up as DLR rather than DLR.U in the USD$ account, iTrade will not allow me to sell them online as DLR.U. This is obviously a (stupid) restriction of their systems since DLR = DLR.U (CUSIP = 44049C104 for both). Will it be necessary for me to call an iTrade broker and explain to them why I should be able to sell these shares on the US side? If so, does anyone have experience as to the appropriate verbage to use so that the hassle is minimized? Also, what commission (if any) will they impose?


    • @AJ: Call iTrade and explain to them that you are unable to sell DLR.U online. They should be able to submit the sell order manually and charge you web commission for it because clearly this is something you are unable to do online yourself.

  56. Thanks. I’ll give that a go and let you know how it turns out.

  57. @AJ: when I tried this in Apr I encountered the same situation with BMOIL. When I tried to call them to do it manually they told me their system was not set up to handle DLR.U. However, it sounds like others have had success with BMOIL. If I do this again I will get confirmation beforehand in writing that they can handle the transaction.

  58. Follow-up:

    I called up iTrade and was able to make the sell trade on DLR.U. To make absolutely certain that they were processing the correct trade, I said the following:

    1. “The iTrade online trading system is not allowing me to make a valid trade in my USD account. Specifically, I hold xxx shares of DLR in my account. Since these shares are interlisted (CUSIP = 44049C104), I should be able to sell these shares on the US market as DLR.U. Please perform this trade on my behalf.”

    2. “Please sell xxx shares on the US market to settle in US$ funds with a limit order at the current bid price.”

    The broker indicated that this was fine but that there would be a $9.99 commission fee. The trade went through and, so far, everything looks good. I will know for sure once it settles.

  59. @AJ: Small correction. DLR.U trades on the Canadian market, not US market.

  60. Thanks for the correction.

  61. I’m looking to convert a large sum of US$ to CDN$ using RBC Direct Investing. Never attempted a Norbert Gambit before. Just curious if the savings are worth the risk? At the moment bid/ask on DLR.U spread is 2 cents. Where I’m confused is the bid/ask spread on DLR….currently it’s 9.87/9.93 so 6 cents spread. Would I lose money with the gambit? Quoted rate today from RBC was .994

    If I understand correctly, I would buy DLR.U from my cash account (currently in US$) then call RBC and ask them to journal the investment to DLR. Once trade is completed (T+3 days) I sell DLR to Cad cash account?

    • @Sydney: I believe at RBC you do not need to use DLR/DLR.U at all. Just use one of the inter-listed stocks such as POT or TD or RY. Buy on the US side. Sell on the CAD side. When the trades are settled, your USD would have been converted to CAD.

      As an aside, converting USD into CAD involves taking on currency risk. Therefore, other gambitting methods such as the one I outlined previously are better IMO. I should also point out that DLR/DLR.U spreads after hours could be much wider. I’ve rarely seen it wider than 2 cents during market hours.

      The usual caveats apply. Please do you own due diligence before proceeding. Report back on what you find!

      • @Canadian Capitalist: In your answer to Sydney, you cautioned about currency risk when converting USD to CAD. Would not a more pertinent disadvantage be the anomaly in the DLR/DLR.U bidirectional conversion favouring the CAD to USD direction that you pointed out In a prior post (about a year ago), or is that information no longer valid?

        A second question I have is, assuming you have a RBCDI account, would a Norton’s Gambit using POT or RIM achieve a more economical conversion than DLR (let’s assume we are converting CAD to USD, which would make the DLR/LDR.U operate at its most efficient mode)/

      • @Oldie: Subsequent to that post on DLR.U/DLR conversion Horizons closed the gap. Good reminder to me to update that post with this info.

        If I had a RBCDI account, I’d go with using POT because one can save a few bucks on the spread because POT trades at a higher dollar value than RIM or DLR. Hope this helps.

  62. @CC: yes, that’s very helpful. Would TD, being even higher dollar value, and trading on both TSE and NYSE at reasonably high volumes be even more economical? Or do I have to be specific and look at the bid-ask spreads each time and ensure that it is actually down to a couple of cents at the moment of trade? (And if the bid-ask is not particularly low, shop around and check RIM POT RY etc for the lowest [bid-ask spread]divided by the dollar cost of the stock?).

    Also, I lost the reference for the post on the anomaly, assymmetrical DLR/DLR.U conversions that you are going to update — when was it originally posted?

  63. @CC: If I understand your reasoning correctly, CM (Canadian Imperial Bank of Commerce) is good because it is priced in the $80+ range and the bid-ask spread listed is only 2 cents (although I’m reading this at night, and the markets are closed, but let’s pretend that when we check during the day it stays as low). So far so good. The trading volume on the TSE was above a million. However, checking on the New York Stock Exchange, the trading volume for the whole day was only 127,000. This is the lowest trading volume of all the major Canadian Bank Stocks I checked for today — all the others are half a million or more, and POT and RIMM are in the millions. Would this low volume on the NYSE disqualify CM as a safe vehicle for NG, despite the favourable spread/price ratio?

    • @Oldie: Good point on volume. When I looked at CM it had sufficient bid/ask size but I did not look at volume closely. Low volume stocks make the gambit riskier. It therefore makes sense to stick to highly liquid stocks. POT and the banks will fit the bill nicely. In the past, I’ve used RIMM when it was trading in the $60 range because trading volume was huge. Sadly, that’s no longer the case.

  64. @CC: I have been doing further research on several fronts on currency conversion. Disclosure: I have a specific large amount, USD$1.4M that I need to convert to CAD, and the best cost that my brokerage is offering, 0.5%, is still a steep $7000, which is why I’m taking all this time and trouble to find out how to reduce my conversion costs.

    Regarding DLR/DLR.U, as a neophyte, I have gradually developed some understanding with what I’m actually intending to do; my on-line brokerage account apparently insists on a 3-day wait for a trade to settle before I can sell the stock. I initially was worried that I’d lose flexibility for the timing of completion of the Gambit, but I realize now that my initial step, purchase of DLR.U in US funds, still has me tied to a US currency instrument, so I can take my sweet time to complete this first step and wait 3 days before waiting for the right time to sell DLR for CAD.

    This is where it gets interesting. I knew DLR.U was just the USD cost for purchasing currency instruments in USD, so the cost ought to be constant. The price suddenly went up in early January 2013 from $9.90 to $10.00. This stunned me, so I looked up the Horizon website to track the cost long term and found that the price was $10.00 2 years ago, but has since declined slowly in a straight line, dropping 1 cent every 9 weeks until Jan 3, 2013 when it suddenly shot up from $9.90 to $10.00 the next day. The long term decline in price was captured in the obligatory “Performance” field, which showed -0.5% (per annum). This is so close to the advertised MER of 0.45% that I have to assume that this slow, exactly straight line price decrease is linked somehow to this MER and is a mechanism of capturing the MER which I haven’t sorted out, but I can think of no other explanation.

    Given that the price is expected to drop 1 cent after 9 weeks, and already 5 weeks have passed, I reasoned that I have very little control over the bid-ask variation in DLR which is subject to random currency fluctuation, but I know that the DLR.U price must fall soon, one cent at a time, and at least will not arbitrarily rise. Moreover, there is sometimes a sudden need (by others) to sell which is unrelated to currency fluctuations, so if I am prepared to wait, and to specify a limit on my purchase price, say $9.98, I could conceivably shave 1 cent off my purchase price, which is half the cost of my Gambit, but more importantly, is the half that I have some control over. Although the bid-ask spread is still listed as $9.98 to $10.00, today’s intraday trading record shows trades (or is it only bids) only at $9.98 and $9.99, so my bid of $9.98 is not unreasonable. Is my reasoning sound here?

    Next problem: I checked the trading volume and was only 22,000 shares today, which would only been the equivalent of $220,000 being traded (and checking back over the months, this is approximately the volume that is usually traded daily). My $1.4M would have overwhelmed the DLR market. So the amount of currency I would like to convert apparently is out of proportion to the capacity of the DLR market to perform the conversion predictably. Would you agree with this reasoning? (However, having done the research, I will make a note for future reference that I can use DLR/DLR.U safely for amounts in the region of $100,000).

    Now, with regard to our prior exchange of information on CM, RIMM and POT, I have read on Canadian Couch Potato (and this blog too, somewhere, I think) that TD has been used with great satisfaction. The trading volumes are over a million on TSE and 300,000 to 500,000 on the NYSE. The bid-ask spread for TD in the middle of a typical trading day (assuming low volatility) is often 2 cents. I checked today at about 1 pm Alberta time and it was running 2 cents on the TSX and 3 cents on the NYSE; I’ll assume 2 cents, which on a $84 stock price is 0.023%. Admittedly this is a best case scenario, but I would have reduced the cost of converting $1.4M to $322 plus the cost of 2 trades!

    I am waiting for a reply from my account advisor at the financial institution run by my Professional Association. I’d like to keep my assets there, but so far their stance is that they have to keep recently purchased shares for 3 days before they can be sold, which for me is a deal-breaker. However, he is going to pass my query further up the management line. Unfortunately, I had to explain very carefully what I was doing, including the math, to this advisor — I find it disconcerting that I, as the supposedly uneducated client, actually now have a more sophisticated understanding of how currency conversion works than the advisor.

    If I get a “can’t do that” back from my advisor, then I’m off immediately to open an account with RBC Direct Investing on-line account (I’ve done my research of the costs involved, and it’s hardly anything) — several on-line commenters have reported performing Norbert’s Gambits going both ways, using RBCDI and buying and selling RY, POT, and TD, as far as I can remember, and the procedure apparently works smoothly, with no waiting for the trades to settle between trades, and no need for journalling the stocks to the other side (i.e. from the CAD side to the USD side or vice versa). Even if I’m charged $140 to transfer funds out of where I’m at, I’d be way further ahead.

    Sorry to go on for so long, but I have not actually read some of this information anywhere before, and I’ve been searching for months for specific how-to-do-it information. Even if the other information I’m relaying from other sources is old news for some readers, I thought it would be helpful for others if I were to re-state it all in one place.

    • @Oldie: You are absolutely correct that if you are exchanging USD into CAD, using DLR.U to DLR means taking on currency risk. However, you are mistaken that the volume of DLR.U correctly reflects its liquidity. I just brought up a quote for DLR.U. I get a bid/ask of 9.98/9.99 and volume is just 3,550. BUT, the bid lot is 872 and the ask lot is 19. Each lot is 100 shares, which means, I can sell $872K (872*100*10) of DLR.U or buy $19K of DLR.U right away without impacting the price. That’s plenty for small transactions.

      If I were you, I would use the traditional Norbert Gambit at one a broker such as RBC Direct or BMO InvestorLine. I’ll use a really liquid stock like BlackBerry, which currently has 26/55 (bid/ask lots) on NASDAQ and 88/55 (bid/ask lots) in Toronto. I’ll enter a buy order for BBRY in the US market and immediately enter a sell order for BB in the Canadian market. I’ll use limit orders at exactly the ask/bid price. I’ll do the transaction in smaller chunks of say $100K each.

      I would be wary of using TD or POT because the bid/ask lot sizes are small. Example: TD has bid/ask lot size of just 3/1 in the US. The volume is plenty but you may have trouble getting the order filled.

  65. @CC: Thanks for the detailed information. It seems every time when I think I have the complete picture, there comes one further detail to trip me up! I was unaware or the bid or ask lot sizes being relevant; I had heard details of Norbert Gambits being smoothly completed using TD without a hitch without mention of lot sizes being a concern — but now that you bring it up, it makes sense. If BBRY is a safer vehicle for large dollar amount NG’s because of the large lot sizes, is there a concern if the cost is ratio of the bid-ask spread (say 2 cents) to the price of the share (in the $15 range), whereas the corresponding values for TD would be 2 cents and $83?

    • @Oldie: I’ve never done such a large gambit as the one you are contemplating. I don’t know if the reporting on NG you see involve smaller amounts. For smaller amounts, liquidity is not an issue but for 100Gs it might be. I looked up TD in Toronto just now. The lot sizes for bid and ask are just 1 and 3. So, liquidity will definitely be a concern here.

      You bring up a good point about the 2 cent spread on BBRY on a lower share price. At current prices, NG with Norbert will cost you 14 bps (2 cents both ways on $14.35) in spread whereas TD will cost you just 6 bps (5 cents both ways on $83). You have to weigh that cost against the risk of your trade impacting the price. Since, you are transacting > $1 million, 6 or 7 bps is quite a bit of money.

      Also, I’m wondering if you checked with your bank to find out what rates they can offer you on $1.4m? You can then weigh that against how much doing a gambit would save you.

  66. @Oldie: Since it’s such a large amount, you may want to investigate using an FX service like this:

    I looked into them a few years ago, but decided the hassle of setting up an account and arranging the wire transfers wasn’t worth the cost savings…but that was for an amount far, far smaller than yours.

  67. @CC,@Erick: Just to report back to you guys that for all the worry we had about small lot sizes, it didn’t result in any glitches. I went to my advisor’s office and was in phone contact to the brokerage head office in Ottawa this morning, and with this set-up went through the Norbert’s Gambit 4 times with, on each occasion, 4100 shares of TD being bought on NYSE for USD and immediately sold on TSE for CAD. The prices on the NYSE ranged from $82.84 to $82.97 with the bid ask spreads ranging from 1 to 2 cents. It turns out there are many layers of bid and ask lots lined up simultaneously behind the numbers that are listed for the current bid and ask. At any rate, the purchase and subsequent sells seemed to be completed within 30-60 seconds of the request, and all seemed to be completed within the bid-ask range. So all in all I got the $1.4M converted from USD to CAD for a cost of about 0.024% plus the cost of 8 trades. I’m not sure I needed to split the total amount into 4 equal tranches to help facilitate the speed of transactions within the original bid-ask ranges, but the cost was well worth it if it helped, which I don’t see any way of determining at this stage. I’m sure I could do this myself now with RBC Direct Investment if I have to do it again. Thanks for your help and encouragement CC!

  68. @Oldie @CC — thanks for a very insightful exchange on NG
    RE: your earlier discussion of RBC DI — does it still make sense to investigate the lowest bid-ask spread on POT, RY, etc. to do an approx $150K CAD-USD conversion?

    Can anyone confirm NG with DI really works: no waiting for the trades to settle between trades, and no need for journalling the stocks to the other side, etc.


  69. @Astriex: I cannot personally confirm the ease of NG with RBC DI, but a search of this site and generally googling Norbert’s Gambit will turn up several posters over the past 2 years who have testified to this, no need for journalling to the other side using RBC DI etc.

    However (and remember, I am no expert generally) having recently exchanged US$1.4M using NG and TD, not with RBC DI, but at my advisor/broker’s desk, with a speakerphone connection to the trader in Toronto, and with a live computer feed of the trade as it progressed, I have a vivid recollection at how smoothly and quickly my 4 lots of 350-400k were bought/sold within 30-60 seconds it seemed to me.

    I just checked with my 20 minute delayed online quote of TD on the TSE, and at 8:50 Alberta time, somewhere in the middle of the trading day in Toronto, the bid ask spread is 2 cents on about $80.60. Similarly on NYSE, which seems an ideal price situation to me. So, again as a non-expert, I would reiterate what I have learned — trade in the middle of the day, a time when trade volume is usually reasonably high, but also with smooth price rates. However, I note that TD had a really flat price for 3-4 days at $80.00 or so then suddenly jumped 65 cents today, maybe that signals some volatility that could suddenly erupt during the few seconds of vulnerability in the middle of your gambit. If you can wait a few days for a flatter day to day line, it might be safer. But remember, I was dealing with $1.4M, a substantial proportion of my net worth, on my first NG, so I had every reason to be obsessively careful and mindful of every detail, relevant or not; the risk and absolute cost of a $140k gambit would be less.

    Today, well not necessarily today particularly, you know what I mean, I would have no hesitation in doing NG $140k all in one go using TD. I would do my due diligence in researching RBC DI again (remember I have not been an actual user of RBCDI myself) to make sure no new quirk had surfaced recently amongst users, I would practice a few dummy trades to make sure I got the usage of DI just right, slickly without hesitation, (remember you have to buy then sell immediately with as little time interval as possible), and I would do it in the middle of the day at a time when the 5 day price trajectory had been reasonably flat and there were no sudden unusual intraday spikes or dips, and while checking for these anomalies I would confirm that the bid-ask spread was in the 2 cent range which it usually is in the middle of the day.

  70. I have done this with Scotia iTrade. First I want to point out that Jacob (a customer service manager) is extremely patient, professional, and open minded. An all around great guy to work with.

    However, nobody else I spoke to in both Customer Service and Trading departments had the slightest clue what I was talking about. I was even blocked from speaking with a manager in the Trading department so after 5 calls I had to place a 6th one to Jacob again to finally finish this. In the end, it was a decent money saver – would have been great except the full week I waited saw a big drop in price off DLR on the Canadian side while the US side stayed the same – watch out for the spread there!

    Here are the details:
    – bought DLR at current price for $10.22 (US dollar side priced at $9.98) = exchange rate .9765
    – transferred the security from my Cdn margin account to my US margin
    – told them to “journal” shares from Cdn to US side
    – Cdn side price now $10.12, US side at $9.98 = exchange rate of .9861

    If I transferred my $30k via cash my rate was .9761 (this is via preferred rate for > $25k).

    Bottom line:
    I got $29,296. Cash transfer would net me $29,196 to save me exactly $100 – blah, right?
    However, if not for my bad luck on the security risk I would have received $29,584 = save $389. Don’t forget someday I will switch this money back which would double the savings (even more when I grow my money). Saving over $750 (+ any growth) is worth the effort.

    You can transfer from Cdn to US account online but at this point I don’t trust that they would not convert it using the cash rate in the process.
    Directions: Manage My Accounts -> Additional Services -> Transfer Securities and Funds Between Accounts

  71. I have one piece of GREAT news on Scotia iTrade. You can get their “spot” rate (which is their average spot rate for the day) automatically for your RSP and TFSA accounts with a simple, low cost setting change and a fee of $30 per quarter!

    Directions: Manage My Accounts -> Additional Services -> Enroll Registered Account(s) in the U.S. -Friendly RRSP Account Service -> check which accounts you wish to adjust

    • Woah, looks like I may have been premature by praising the “US Friendly“ option at iTrade. I just sold a security which listed the exchange at 1.01, but when I used the proceeds to buy something else it had the rate at 1.03! There was a few days in between the trades but it looks to me like they are up to the same old tricks, just giving them selves even more money…

      I suppose the one benefit may be that the trade settles right away. Nice of them to take piles of my money faster…. I wonder if I can do a gambit to hold US cash in TFSA or RSP accounts…

      • Woops, I jumped the gun, sorry. I accidentally placed the sell order on my CAD Margin account, not my RSP. When I placed the order in the RSP it correctly quoted 1.01.

  72. CanadianFrugalist

    @cc and others:

    I am planning to convert CAD $150K into USD to buy a US investment property . Oanda’s FX rate is between 0.05% to 0.10% (5-10 pips) above the spot rate. From the look of it this might save me more money than NB ?

  73. At Questrade there is no T+3 delay, or T+2 to journal! It took less than 5 minutes. As the trade desk representative said it will “flatten out”.

    I placed step 1 & 2 using the IQ platform. Since the selling of DLR.U.TO cannot be done through their IQ platform, you have to use the trade desk. The $45 trade desk fee is waived. The nice part about calling the trade desk is they’ll journal the stock while you’re on the phone with them. I barely even had to ask, it was obvious to them to sell DLR.U.TO.

    I waited for a trade representative longer then it took to buy and sell. The only downside, and a small one, is I have to wait overnight for the USD to show up in my IQ platform. The trade desk executed the trade using a different platform and the synchronization occurs overnight.

  74. For an $100K NG, it came out to < 2pips!

  75. Pingback: Low Cost Currency Conversion with DLR/DLR.U ETF | Million Dollar Journey

  76. I’m not getting this.

    I purchased 580 units of DLR.U in my US account. It cost $5804.

    It shows up in my US account at TD Waterhouse as DLR. It settled today and the market value is now $5718. I’ve already lost $85!!!!!

    What the hell?

    • Canadian Capitalist

      I have no idea. DLR.U is trading at $9.97, so 580 shares are worth $5,782. Why do you say the market value is $5,718?

  77. That’s what was listed in my TD Waterhouse account. I’m confused as to what currency it’s in. If it’s in my US account it must be in $US, right? But it looks like I bought DLR instead.

    I put the order in for DLR.U but here is the listing I have in my US account…

    HORIZONS U$-A ETF T/U-NEW DLR 580 $10.12* $5,804.191 $5,754.56 -$49.63 -0.86%

    • Canadian Capitalist

      @Joe: If you entered an order for DLR.U on the US side of your account, then you purchased DLR.U with US dollars. DLR.U traded today at $9.97, so your balance is $5,782 (US). If you journal it over to the CAD side of your account, you’ll be able to sell DLR, which traded today at $10.17. Your balance will then be $5,898 (C$).

  78. Is there a method for Norbert’s Gambit for other currency pairs? I am particularly interested in EUR->CAD but I am not sure how to find stock exchanges and how often they interlist shares between those two currencies?

  79. Given DLR @ 10.50 and DLR.U @9.96 at this time, would it still make sense to convert 50K CAD to US dollars?

  80. Since I am not clear, I hope the question is not confusing: I meant to ask using NB method, at this time given DLR @ 10.50 CAD and DLR.U @9.96 US at the market price today, would I save on conversion money to convert 50K CAD to US dollars?

  81. Canadian Capitalist

    @DrSAR: I’m not aware of gambitting other currency pairs.

    @rumi: Which broker are you with? If you have accounts with RBC or BMO you don’t have to use DLR. Any interlisted stock can be gambitted automatically. With gambit, you’ll get pretty much the exact spot rate. Compare a gambit cost with what your broker quotes you for an exchange and see for yourself.

  82. Thanks. I am with RBCDI.It seems to be quite risky to gambit now given US dollar is bigger than CAD. Any particular criteria other than interlisted that I should keep in mind before choosing the stock/ETF.

  83. Thanks for this great explanation, CC!
    One question though: in your example would you not be charged the 2 cent spread twice (when buying DLR and selling DLR.U)? This would mean that your costs are 2 trading commissions plus 2x the bid-ask spread, no?

    • Canadian Capitalist

      Think about it for a second. Say bid-ask spread is $9.98-$10.00. If you buy at $10.00 and sell at $9.98, you’ve paid the 2 cent spread once, not twice.

      • Is the logic then that whatever price you buy DLR at it’s instantly worth $10 in DLR.U? And is the spread you’re talking about really the difference between the DLR.U bid price and $10? If so, DLR.U has lately been trading between $9.96 and $9.97 so I don’t see how it’s worth $10 (I’m not sure why I keep reading about the price being locked in at DLR purchase when DLR.U fluctuates a bit). If you actually mean the 1 cent bid-ask spread here I’m lost as to why it is of relevance at all as selling DLR.U at $9.98 with a spread of 2 cents is preferable to selling it at $9.96 with a spread of 1 cent…perhaps I’m just financially challenged.

      • Canadian Capitalist

        @newmanity: DLR.U is supposed to be set constant at $10. But, due to the current low interest environment in which the holdings of DLR.U (US cash or equivalents) pay less interest than the fund’s MER, DLR.U value has been gradually losing value. Since an investor changing currency with DLR/DLR.U will hold the stock for a very short period, the value (even if it isn’t exactly $10) will essentially stay constant during the holding period. Think of 1 unit of DLR.U as $10 USD. DLR fluctuates with the change in value of CAD against the USD. See the following chart:

        You can that the line in red (DLR) fluctuates quite a bit but the line in blue (DLR.U) stays more or less constant. Hope this helps in clearing things up.

  84. Hi, I want to covert CAD to USD as of today Oct 29, 2013 and please correct me if I’m wrong.
    Stock quotes DLR
    1- Log in to my Discount Broker
    2- Bid on a limit order at the current Ask price = 10.44
    If the order got executed, call broker to move my DLR to my USD account
    3- If allowed right away or wait for 3 days, then sell My DLR at current Bid Price = 9.95

    Now how do you know if the Bid-Ask spread is 2 cents since the CAD is cheaper than the USD?
    An other question is will my DLR ticker turned to DLR.U after being moved to USD account?

    I appreciated for you prompt response.

    • Canadian Capitalist

      @KM: The steps are correct. Re: your questions. (1) Pull up quotes for DLR and DLR.U. You should see a 2 cent spread between bid and ask price. (2) Chances are after you journal shares over to the USD side, your holding will still be DLR. No matter. Just make sure you are selling DLR.U and the broker will figure the rest out. Hope this helps.

  85. Can you verify if the Tickers are correct – DLR.TO and DLR.U.TO?
    Why has the Bid-Ask spread be 2 cents? What if I can get it for just 1 cent, will it be in my favor?

    • Canadian Capitalist

      Yep, DLR and DLR.U are two tickers. If bid-ask is less than 2 cents, it’s even better for you, of course 🙂

  86. Great post. helpful as always

  87. Once the NG is complete and the US cash is sitting in your USD TD Waterhouse account, how are people moving their money to their US Banks?

    In my case, I have a Bank of America. The two ways that I’ve figured out are: a) wire the money (but this is expensive at $30) or b) ask for a Bank Draft ($6.50) and pick up at your local TD branch and then deposit in to BofA via Android photo deposit app.

    Any other cheaper options that I’ve missed?

  88. One thing I don’t understand is it seems with DLR there is and obligatory 3 day waiting period for the trade to settle, but with standard TSX/NYSE dual listed stocks, we can complete the buy/sell immediately? Why is that? Right now I use FX service which takes about 50 basis point margin on $10k size transactions.

  89. Hi Canadian Capitalist

    I am not a financially savvy guy. I need to convert over 160k CAD to USD. Does the DLR & DLR.U method you described work for a large volume like this. What do you suggest in my case.

    Thanks for your help

    • Ram Balakrishnan

      @Ram: Who is your broker? DLR/DLR.U should work for large conversions like the one you are contemplating though I’ve never done such a big one myself.

  90. Thanks for your response Ram. My broker is Scotia iTtrade. I have a restriction where I have to wait for 30 days between the buy and sell as my wife works for a bank and the bank has policy that dictates this. This could be a problem for me.

    I called a few FX brokers and couple of them game a rate of 1.0991. Could you pls tell me if I did aa DLR/DLR.U, what rate will I end up with. I am trying to figure out how much I will save with the gambit so I can determine if it is work the effort as I have to apply for deviation with my wife’s bank.

    Thanks again

    • Ram Balakrishnan

      @Shri Ram: Markets are closed now. I see an ask of 10.95 for DLR and a bid of 9.97 for DLR.U. That means that if you buy DLR today and sell DLR.U later, you’ll get an exchange rate of 1.09829 minus your trading commissions of $20. I’ll be surprised if you can exchange at a better rate with a broker. Can you post what rate brokers are willing to sell USD at?

      The nice thing about DLR is that it allows you to fix your exchange rate when you buy it. You can sell DLR.U at any later time (even a month later) and the exchange rate fluctuations in the meantime have no effect.

  91. Thanks again for your response Ram. One of the brokers (Knightsbridge) is giving me 1.0986 as of Apr 14, 12.40pm EST. What do you think about this rate.

    Thanks again.
    Shri Ram

    • Ram Balakrishnan

      @Shri Ram: With DLR/DLR.U, I’m getting an exchange rate of 1.0982. Since you are getting a better rate with Knightsbridge, I’d say go for it!

  92. Thank Ram, appreciate your help.
    I managed to negotiate a rate of 1.0986 with my bank itself (CIBC) so I did not have to go through opening an account with a broker.

    Thanks again for yout help
    Shri Ram

  93. Just a comment about using Interactive Brokers for low cost currency conversions. It’s possible to do, but you won’t be able to withdraw your money for 120 days! This rule is designed specifically to prevent people from using them as a cheap foreign exchange service. And by the way, to their discredit, this is not made clear anywhere on their website that I could see. The customers they want are day traders who generate a lot of commission fees, not occasional traders.

    Here’s how it works. You set up an account and make a bunch of assertions about how you’re going to be a frequent trader (otherwise you’re not welcome). Once the account is set up, you can go online and direct IB to electronically transfer money from your bank account in either US$ or CAD$ (or other currencies). In a couple of days, the money arrives in your account. Now you can make a trade on the FX market, which runs 24/7, at basically the spot price. Very satisfying. IB charges a very small commission (e.g. .20 basis points or US$1.00 whichever is greater).

    Now you’ve exchanged your money, BUT YOU CAN’T WITHDRAW IT FROM IB FOR 120 DAYS (unless you convert it back to the original currency!). You also pay a monthly minimum of USD$10 for commissions to keep your account open.

    All in all, not a great solution for occasional FX transactions.

  94. any chance anyone knows if this will work at credential direct?

    • John: I successfully used DLR to convert US to Can $ Sept 2014 using Credential Direct. I had to either do the buy or sell (can’t remember) over the phone as there was confusion over DLR & DLR.U online.

      I am about to do a similar conversion again with Credential.

  95. I just completed a US->Can conversion (non-rrsp) using DLR with Credential Direct. Here are the details:

    1. Buy DLR.U shares in US account over the phone (will be given online commission of $8.88)
    2. Journal shares over after 3 business days over the phone
    3. When DLR shows up in Can account, can sell online

    The savings were as follows for converting $9000US:
    – $143 if use Credential Direct (they charge ~1.8%)
    – $64 if use (they charge 1.015%)

    During my transactions, the spread for DLR and DLR.U were only 0.01, so my cost for the 917 shares was about $27. Currency exchange rate was the same at the buy & sell.

    Note that both VBCE and Credential will offer better rates for larger sums. I’ve done larger conversions using Credential with a 0.5% fee. However, if I would have used DLR/DLR.U, it would have been 0.1-0.2%

    • Ram Balakrishnan

      @Stan: Thanks for your detailed comment. It is appreciated and good to know this process works at Credential Direct.

    • thanks stan! thats great to know. i dont totally understand your reference to saving $64 with vbce? why would you save less then with credential direct? or do you mean the cost to use regular currentcy conversion would be $143 at credential $64 at vbce and you only paid $27 using the DLR method?


  96. Hello,

    I have a question about buying and selling interlisted stocks on different exchanges and on different days; as well as capital gains/losses implications.

    If I were to buy 120 shares of RY on the TSE (Canadian exchange) with Canadian dollars from the Canadian side of my account on a day when the currency exchange rate is 1.11 (USD->CAD);

    and then a week later if I sold those same 120 shares of RY on the NYSE (American Exchange) for American dollars to yield on the American side of my account when the currency exchange rate is 1.09 (USD->CAD);

    What are the tax implications of this with regards to capital gains/losses?

    How would I factor in that change in currency value?


    The day I bought it 9851.15 CAD (Currency Exchange at the rate of 1.11 is equivalent to 8874.91 USD)

    The day I sold it 9037.75 USD (Currency exchange rate of 1.09 is equivalent to 9851.15 CAD).

    The amount the stock is worth remains the same in terms of Canadian dollars, and I am a Canadian taxpayer. However the value in terms of US dollars went up due to the change in currency values.

    Thank you in advance for any help you can give me.

  97. @FunnyBunny: You need to convert the USD back to CAD. When filing your income taxes you have two options: use the average annual exchange rate, or the specific exchange rate for each trading date (not settlement date). Both historical rates are available on the Bank of Canada website. I prefer the latter. I’ve incorporated it into a powerful spreadsheet that calculates my ROI, and helps manage rebalancing across multiple accounts.

  98. Currently DLR is trading at $11.16 and DLR.U is trading at $9.94 Am I correct in my understanding that using these vehicles to convert CAD to USD will save me on premiums/fees from the banks for converting FX but cannot protect me from the loss on the actual difference in currency value?

  99. Hi Canadian Capitalist
    I’m a neophyte investor and i am still learning the NG. I tried this with my Scotia tirade account. I successfully purchased DLR and transferred shares into my non-registered US $ account. Now that they have been journaled over, can i sell as DLR inside my US $ account even though they still listed as DLR CAN currency? Do i have to call a broker to sell DLR.U? What are the repercussions? Help!

  100. I am a neophyte investor who has done 3 Norbert’s Gambits successfully quite easily after a lot of careful research. I cannot speak for the specifics of how to do it in the Scotia trade account, but from what I know of how I did it in my account, and how other on-line commentators and resources have described doing it on various platforms, I can safely say once DLR has been journaled to the USD account (even before, actually for some platforms!) you can safely sell it. If there is any way you can do this by exploring the “SELL” tools in the BUY/SELL section of your on-line trading account you should safely do so. If not, you have nothing to lose by calling your broker for help. You should perhaps ask him for help in stepping through the procedure on-line over the phone. That way he shouldn’t charge you the full brokerage fee for a sell.

    I should mention that for me when I used DLR there was a delay between buying and selling, which was not ideal. In that time there was a drop in price of the USD which made absolutely no difference in what happened when I bought a US ETF, which was the next step. But that meant that I encountered a theoretical capital loss in terms of Canadian dollars. If it had gone the other way, I think I would have encountered a capital gain which I would have been obliged to declare on my tax return.

    There is a nice summary in the Canadian Couch Potato website of how to do the Gambit iusing the on-line brokerage accounts of all the major banks.

  101. Hi CC,

    Could you tell me how to minimize losing money when trying to get from USD to CAD. With my boker (Questrade) I have to endure a 3 day settlement delay in my registered account, so there is fairly significant risk of losing money if I invest in DLR.U or a US interlisted stock. Especially these days, with the interlisted bank and energy stocks getting hammered.

  102. DLR/DLR.U is the best method, since it is tied to the US dollar, as opposed to the inter-listed stocks which fluctuate more.

  103. Hello CC,

    I’m a bit confused. If I hold USD cash in my US trading account and I wish to convert to $CDN, as you say I would sell DLR.U in my US trading account. But I dont understand, why would I need to buy DLR in my canadian account ?