arrow15 Comments
  1. Mike Holman
    May 08 - 8:10 pm

    This is very good. I don’t understand why you have to sign up for it however. It should be automatic.

    As you say, if they did this for dividends and interest payments as well – no need for US$ account.

    Now they need to work on lowering their high currency exchange fee.

  2. Canadian Couch Potato
    May 09 - 7:56 am

    I guess we should be grateful for any improvement. This sounds similar in principle to iTrade’s US Friendly RRSP, but iTrade charges $40 per quarter for the privilege of not being gouged on the currency exchange.

  3. Viscount
    May 09 - 8:24 am

    It’s definitely an important move in the right direction, though automatic washing of dividends is important and proper USD subaccounts would be better. (I suspect TD’s software is just too antiquated to change though.) It’s amazing what a little competition from RBC (and QTrade and Questrade) can do.

  4. Phil S
    May 09 - 8:25 am

    I have a completely separate US brokerage account aside from my Canadian one.
    But Mr. Carrick also published an article promoting global diversification on the weekend. The currency implications of global diversification adds another level of complication in everything and of course results in more fees to be earned by the “industry”… In my humble opinion.

  5. Canadian Capitalist
    May 09 - 10:37 am

    @Mike: It’s not a deal breaker yet but washing US dividends is one the things I wish TDW will do.

    @Canadian Couch Potato: I actually like iTrade’s US-Friendly RRSP because they also provide a break on the converting currency from CAD to USD or vice-versa. I do wish all brokers would move to a flat fee model for currency conversions.

    http://www.canadiancapitalist.com/scotia-itrade-offers-a-us-friendly-rrsp/

    @Viscount: Agreed. Competition is good for us. After all, when TDW first cut commissions for household assets exceeding $100K and then $50K many other brokers immediately followed suit. I do hope there is enough pressure on TDW to wash dividends as well.

    @Phil S: Currency does add one more level of complication to globally diversified portfolios. But past experience has clearly shown that direct holdings reduce portfolio volatility. And yes, currency conversions are pretty expensive, so investors should try and keep conversions to a minimum. Features such as wash trading and US dollar RRSPs really help in this regard.

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  7. My Own Advisor
    May 09 - 9:32 pm

    Good news! It’s a start with TDW…

    I try not to worry too much about currency issues…direct U.S. holdings help. I might have 15% of my overall portfolio in U.S. stocks or ETFs.

    BTW – got my new site up and running Ram:
    http://www.myownadvisor.ca/

    Lastly, good interview with Rob @ the G&M – I thought you did well!

    Cheers,
    Mark

  8. gsp
    May 10 - 10:45 am

    Is there any way to avoid the initial currency conversion from CAD to USD in RRSP accounts when wanting to purchase ETFs traded on US exchanges? Of course my question assumes the investor has both CAD and USD cash and ETFs in non registered accounts.

    Can some swaps or in kind USD contributions be made? Never really looked into this since it isn’t relevent to my accounts but it is likely to come up for a few people I’m helping out. I just hate the idea of getting fleeced on currency conversion when the investor already holds the currencies required outside the RRSP.

  9. Canadian Capitalist
    May 10 - 11:23 am

    @gsp: If the investor already holds US currency outside the RRSP, they can (a) contribute in-kind or (b) buy TDB166 in the taxable account, contribute it in-kind to the RRSP and then purchase an US ETF. I’ve done the former at a couple of brokers and the latter at TDW.

    http://www.canadiancapitalist.com/contribute-us-stocks-in-kind-to-your-rrsp/

    Investors can save on initial foreign currency conversions with the Norbert Gambit. I’m hearing reports that TDW doesn’t always allow investors to journal shares and sell right away in taxable accounts. Apparently, the gambit is automatic in RRSP accounts but I haven’t done this personally myself.

    http://www.canadiancapitalist.com/easy-norbert-gambit-in-td-waterhouse-rrsp-accounts/

  10. gsp
    May 11 - 9:22 am

    Thanks CC.

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  12. The Dividend Ninja
    May 13 - 10:10 am

    @CC
    Thanks, as a TD client with US stocks in my RRSP this is very useful information :) Nice that wash trades can be setup automatically now. I would not be for a flat-fee model, since I don’t trade US stocks frequently. However it probably comes out ahead if you are making significant US stock trades – but not for the majority of traders I would suspect.

    • Canadian Capitalist
      May 13 - 11:22 am

      @The Dividend Ninja: The flat-fee model will help investors who are adding to their US stock holdings. Recall that typical currency conversions cost you 1.5% to 2.0%. If a flat-fee model costs $30 per quarter, someone exchanging $2000 into USD will break even. Anything over that is savings and a substantial one at that. If you are exchanging $5,000, a 1.5% fee works out to $75.

      I agree that I wouldn’t pay a flat-fee just to wash trades either however heavily you trade US stocks. You can get that at many brokers for free with wash trading or separate USD RRSP accounts.

  13. [...] Canadian Capitalist also discussed that automatic wash trades now available with TD Waterhouse. A wash trade allows investors to buy and sell U.S. Stocks (for [...]

  14. [...] (January 16, 2012): You can now set up automatic wash trading in registered accounts by calling TD Waterhouse. Post a [...]

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