BMO InvestorLine (read review here) will soon allow clients to segregate their Canadian and US Dollar holdings in registered accounts including RRSPs and TFSAs. The ability to hold US dollars will not, however, be available to RESP accounts. According to client service representatives I spoke with recently, BMO InvestorLine will be rolling out the new feature in the second week of September 2011. Competing discount brokers that offer US Dollar registered accounts are RBC Direct Investing, QTrade and Questrade.

It appears that the BMO InvestorLine registered accounts will work just like RBC Direct Investing’s Dual Currency accounts work today. The US dollar side of the registered account will be available to new and existing clients automatically. However, existing clients will have to phone the broker to transfer current holdings they wish to hold in the US dollar side. BMO InvestorLine will not charge an extra admin fee or extra trading commissions for US Dollar registered accounts.

The ability to keep CAD and USD holdings separately is good news for BMO InvestorLine clients. They can completely avoid forced currency conversion when buying and selling US Dollar securities in registered accounts. By converting currency with the Norbert Gambit they can save on steep conversion charges. And best of all, US dollar dividends will not be converted into CAD for holdings in the USD side of registered accounts.

This article has 31 comments

  1. Finally! Thanks for this news CC.

  2. Any sign of CIBC Investor’s Edge offering the same? Usually they lag behind the others in services, but eventually catch up.

  3. yeah 2 more statements to download every month!

  4. @My Own Advisor: Are you a BMO client Mark? And yes, USD accounts are good news for clients.

    @Sandy: Unfortunately, I haven’t heard anything about CIBC Investor’s Edge.

    @Millionaire: Yes, more statements to download would be a small downside. But, I think it’s not too onerous.

  5. Hopefully the competition will result in some of the other big banks following too….

  6. @cc
    It’s starting to be onerous. 3 rrsp, 2 tfsa, 1 resp, check accounts, savings accts, credit cards, pay stubs, hydro quebec bill, phone bills (home + cells), cable, ………… I definetly think it’s starting to be a major pain.

  7. Woo hoo! I’ll be taking advantage of this one. On the subject of statements, my current non-registered accounts produce only a single statement that includes both the Canadian and U.S. dollar portions. If the registered accounts work the same, then I can look forward to the same number of statements, but they may be longer.

  8. @Millionaire. I think having multiple investment accounts is a natural consequence of CDIC only insuring up to a maximum of $100K. That and I don’t think a lot of these a lot of these discount brokerage accounts are CDIC insured anyways, so it forces us to always move our cash around between different accounts at different institutions.

    I totally agree that it’s a royal pain, but it’s simply a fact of life of being a self-directed investor in Canada.

  9. CC, I’m a BMOIL customer and was recently told the same thing. It must be getting close to being true. Now the next step, if they’ve taken the suggestion I gave them long ago, is to be able to do an asset allocation and performance summary across all accounts – non-reg, TFSA, RRSP, LIRA. I would guess many others are in the same boat as me and want to plan and assess their total portfolio. As it is I have to do it all manually with a spreadsheet and it is quite a bother.

  10. Just waiting for TD Waterhouse to finally do this.. Come on TD, you can do it!

  11. I think this can be interpreted as good news. Banks generally will not institute changes unless they can see a benefit, especially for high net worth clients. Most banks will follow each other in new products and initiatives so its only a matter of time before the big 5 all offer this in some format.
    Working in a job where I frequently exchange CAD and US currency, I can see the huge variances in gains/losses from day to day. Being able to avoid currency conversions when trading USD investments will definately help investors keep more of their money instead of it being lost in conversion. As well, it should be easier for the less experienced investor to see what % of one’s portfolio is foreign holdings, especially as the Canadian government likes to limit foreign investments in registered accounts.

  12. Congrats BMO!!! It only took 10 years, thousands of customer complaints and a few class action lawsuits to make this happen!

  13. @Millionaire: You do have the option of continuing to keep all your stocks in the CAD side. If you do that, US dividends will undergo a forced conversion into CAD.

    @Phil: I don’t know about BMO but TDW offers savings accounts from different institutions. By splitting money between them one can still keep everything in one account and get full CDIC coverage.

    @CanadianInvestor: Asset allocation & performance summary would indeed be very useful. However, I’m not sure it will eliminate the need for a spreadsheet which comes in handy when I want to add money and it has done all the calculations for me already.

    @Mike: Unfortunately TDW clients are likely out of luck. From what I understand TDW employs a totally different software that they say cannot handle splitting RRSP accounts.

    @Cherrie: Agree with you on the costs of currency conversion. The RRSP foreign content rules are ancient history now. They were eliminated years ago.

    @Justin: A good profit center is difficult to give up!

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  15. Nice! It would have been good if BMO started this a bit earlier. IMO, it’s about time!

    I recently opened a USD RSP account with Questrade. If I’m not mistaken, I believe Questrade was the first in the industry to offer such an account.

    Thanks for spreading the news.

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  18. I have been asking BMO for this feature for a long time. I’m glad it is coming but disappointed that it took so long.

  19. “Unfortunately TDW clients are likely out of luck. From what I understand TDW employs a totally different software that they say cannot handle splitting RRSP accounts.”

    Well, software is made to be updated and modified. Hopefully a little technical challenge won’t stop them… If most of their competitors start offering it, I would be surprised if they didn’t.

  20. The BMO IL site says the US$ holdings is live as of today. Their website says that if I initiate any trades of US holdings, it will settle in US$ by default. However, I just got off the phone with BMO Investorline, and the rep manually moved all of my US holdings over to the US side (one by one) so my dividends will settle in US$. He told me that since it was new, double-check tomorrow in my online account info to see that they now show as US$ holdings (and if not, to call back). FYI: I did this for my one RRSP & two LIRA’s accts. My TFSA & son’s RESP are not @ BMO… 🙂


  21. For BMOIL, isn’t cash held in “the Bank Account component”, hence CDIC-insured (not CIPF)?
    So US Dollar cash in BMOIL RRSPs (or non-RRSP investment accounts) is uninsured, right?
    That’s idle cash, cash from settled US trades that haven’t been redeployed, etc.

    I recall reading the Client Agreement after Lehman (I know, *after*) and coming to this interpretation.
    Am I making the correct interpretation?


  22. Just a follow up to my post from yesterday… all of my stocks now either have a “C” or a “U” beside them to denote Cdn$ & USD holdings. There are also new options to look at just Cdn$ or USD holdings individually. Cash balances are also listed separately in both currencies. Looks like if you are a BMO IL account holder and hold US stocks, you should call to get them to fix up your existing holdings so that your dividends settle in the appropriate currency. New purchases / sales should settle in the right currency automatically.



  23. @Kevin: Thanks for your comments. It’s good to know that this feature is now live and the process outlined by BMO IL reps was accurate. Can you please check that dividends received from a US stock holding are credited to the correct account and drop us a quick comment?

    @YVR: Interesting question. My impression was that cash in brokerage accounts were *not* CDIC insured. GICs and savings accounts such as Renaissance will have CDIC coverage but if the brokerage fails, it will be CIPF that will kick in. It’s worth revisiting this topic I think because it is very important what with so many financial institutions going bust in the financial crisis.

  24. I think BMOIL forces money to travel in/out through their AccountLink bank accounts. I believe trades/dividends/etc settle into/from these bank accounts also.

    Part A of the Client Trading Agreement defines the “two components” of “The Account”.
    Part B of Client Information describes the CIPF and CDIC protections for the two components.

    Maybe I’m misinterpreting (???) but in times of stress, I’d feel wary about leaving any USD cash in BMOIL or CAD cash > 100k, thinking CIPF will cover $1m. I believe you’re correct wrt cash in most other brokerage accounts being covered by CIPF (I also use IB and I think cash is under CIPF).

    I’m revisiting this because I still use BMOIL for RRSPs and I’m going to take advantage of their new US Dollar features. Any thoughts/etc would be much appreciated. Thanks!

  25. BMOIL: Part F, bullet #5 of Client Information also discusses CIPF and CDIC.

  26. According to the FAQ, the US dollar dividends will be held in US dollars. Also we have to call to move the current holdings to the US side.

    How does the US side of my account work?

    Like BMO InvestorLine cash/margin accounts, registered accounts are now capable of maintaining Canadian dollar and US dollar balances. This allows you to preserve your US dollar without any foreign exchange conversions being applied to your US buy and sell orders. You can also move your US denominated securities from the Canadian side of your registered account over to the newly created US side. This would allow you to receive US dollar distributions paid directly into your account without any foreign currency conversions.

  27. Thinking of moving all my US denominated securities from the Canadian side to over to the newly created US side. Can anyone think of a disadvantage in doing this or is it a no-brainer and everyone should do it?

  28. An update: Yesterday I noticed a US stock dividend arrived in my account this past Friday – it settled in Cdn$. My initial reaction was that their system wasn’t working properly yet, so this morning I called to inquire. The response was that since the stock in question had a dividend Record Date of Aug 31st, the dividend will settle in Cdn$. Similarly, my McDonald’s shares had a record date of Sept 1st, but is not due to be paid until Sept 16th, so it will also settle in Cdn$ since my stocks weren’t shifted to USD holdings til the 6th or 7th of Sept. All dividends with record dates after this should settle in USD.

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