E*Trade Quietly Offers Limited Wash Trades
GK sent me an e-mail noting that E*Trade has joined TD Waterhouse and Qtrade in offering some form of “wash trade” capability when buying and selling US dollar stocks in a RRSP. A slightly edited version of GK’s note is posted below with permission:
I followed your post about Questrade allowing customers to hold US Dollar in their RRSPs, and I applaud TD Waterhouse’s automatic “wash trade” capability. I was under the impression that E*Trade didn’t allow wash trades, but when I switched to TD, E*Trade contacted me and asked me to come back.
I told them I left because E*Trade doesn’t do wash trades. I was told that yes, they do wash *rates*, but it requires a phone call after the trades are made, and the trades have to occur on the same day.
Since then, I have sold and bought US stocks, and have had success in getting them to wash the trades. Customer service has been kind of spotty, though, so I’ve had to be persistent. The occasional service representative says “We don’t do wash trades”. Eventually, I find someone who knows what they are doing.
I’ve since learned that this is a service they offer to people with over $25k invested with E*Trade. Also, there is no way of investing any left over USD in a money market fund, similar to TD Waterhouse.
I’ve done wash trades on three separate occasions now, and washing the rates has worked every time but I’m always a little worried that I’m going to have a problem with it. TD’s automated washing gives more peace of mind.
I look forward to a day when we are allowed to settle an RSP sale in US Dollars at any broker but I’m sure they will not be in a rush to offer this like Questrade has. It’s just too much of a cash cow: they make more during the double conversion than through commissions.
Thanks GK for your note. E*Trade’s website makes no mention of the “wash” capability but when I called E*Trade, the agent I spoke to confirmed that when US dollar denominated stocks are bought and sold in a RRSP on the same day and the client gives a call to request a wash, they are able to do it. The agent was a bit vague on a definite criteria saying that it’s offered for “certain clients”. Still, it is encouraging that E*Trade offers some form of wash trading capability, especially since their currency conversion charges are among the highest compared to other discount brokers.