Scotia iTrade announced today that it will start offering an US-Friendly RRSP account for a flat fee of $30 per quarter per RRSP, TFSA or RESP account. The US-Friendly account will not be an US-Dollar RRSP account like the one offered by RBC Direct Investing. The account will still be denominated in Canadian dollars but instead of charging account holders the retail exchange rate, iTrade will charge a preferential Scotia Capital Inc. (SCI) mid-market rate.


I called Scotia iTrade today to get a handle on how much US-Friendly account holders can save on foreign currency transactions. A client purchasing $10,000 (US) worth of US-dollar securities in a regular account will be charged $10,089 in Canadian dollars. Another client making the same transaction in a US-Friendly RRSP account will be charged the SCI rate of $9,924. On a $10,000 (US) transaction, the US-Friendly account holder would have saved $165 in hidden foreign exchange fees.

The US-Friendly account holders can avoid automatic foreign currency conversions on US dollar buys and sells transacted on the same day because both trades will be converted at the same exchange rate. An investor selling and buying US securities in a regular Scotia iTrade RRSP account would have lost $330 in (needlessly) converting US dollars into Canadian dollars and back into US dollars again. Note that a few other brokers such as TD Waterhouse already wash US dollar trades in RRSP accounts.


You have to weigh the benefits of getting a preferential exchange rate against the quarterly fee of $30 per registered account. You still have the option of having a regular, no-fee, registered account.

US dollar dividends received in a US-Friendly account will still be converted to Canadian dollars at the retail exchange rate.

All cash conversions from CAD into USD or vice-versa will continue to be converted at the retail exchange rate. The preferential rate will only apply for US dollar trades.

Bottom Line

Despite the quarterly fee, Scotia iTrade clients who tend to purchase a lot of US-Dollar securities in their registered accounts will see savings with a US-Friendly RRSP. As someone with accounts at TD Waterhouse, I don’t see a compelling reason to switch. I can obtain all the advantages of the US-Friendly account at TD Waterhouse when I exchange currencies with the “Norbert Gambit” and the disadvantages remain the same. Now, if only Scotia iTrade had decided to offer a US-Friendly, US-Dollar RRSP account, I might have been sorely tempted to switch!

Also check out coverage of the US-Friendly RRSP by The Wealthy Boomer and Money Smarts Blog.

This article has 32 comments

  1. Thanks for the mention.

    I agree, that this could save quite a bit of money for some current iTrade clients.

  2. It’s a move in the right direction by Scotia iTrade.
    I am a client of BMO Investorline and getting tired of their forced CAD/US foreing exchange every time I trade US securities. They have been promising an option of having a true US registered account for years and still nothing..

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  4. This is a really nice deal. The quarterly fee times 4 is still cheaper than doing two Norbert’s Gambit transactions at TD Waterhouse (assuming one doesn’t have enough savings to qualify for reduced TD Waterhouse pricing), which is VERY convenient for people who invest relatively small amounts regularly rather than converting big lump sums of money a couple times a year.

    I think it’s conceivable TD could match something like this. (TD’s systems seem far too antiquated to handle something like RBC’s dual currency accounts, if the way TD integrated Global Trading is any indication.) TD really needs to step up to the plate, or I’m switching to either Scotia or RBC.

  5. I am not too happy with the 30$ fees. I use ScotiaITrade and it may just be what makes me switch. I like the Scotia Research but I have not much else. I was looking forward for the introduction of the US RRSP account but it’s not worth 30$ per quarter.

    I’ll stick to buying their shares. This may just allow them to do a dividend increase 🙂 Along with the 20% banking fee increase that kick in in February.

    I am actively researching the other discount broker. Looks like TD isn’t making some happy and neither is BMO Investor Line. Questrade doesn’t work for me since it doesn’t provide DRIP discount.

    Anyone got a comment on RBC? I like the review of RBC in the globe and mail when they reviewed the discount brokers.

  6. @Money Smarts: Yes, the $30 per quarter sounds steep but someone converting $10,000 every year will save $165. So, there are some savings to be had. Too bad it is per account and doesn’t seem to be available for cash conversions.

    @G: Converting currency on US dollar buys and sells is just scandalous in my opinion. BMO should either offer a way to wash trades or offer USD RRSP accounts.

    I recall switching from RBC Direct (before it offered USD RRSP accounts) to TD Waterhouse simply to take advantage of wash trading. I was switching all my US stock holdings into ETFs and it would have cost me an arm and a leg at RBC Direct. It cost just commissions at TD Waterhouse.

    @Viscount: I agree that this is a nice deal despite the fees. I’m happy to see brokers competing on foreign currency. The markups still remain far too high in my opinion.

    @Passive Income Earner: I had accounts with RBC Direct before. It worked really well for me because I also had bank accounts at RBC. The deal breaker for me was wash trading (this was before the introduction of USD RRSP). Now that I’m with TDW, I don’t have a compelling reason to switch back. USD RRSP is nice but wash trading accomplishes the same thing. The one negative at TDW is the lack of online access to GICs.

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  8. This topic came one day after I realized I could move my Vanguard ETF’s into US accounts with RBC and did so. I am still unclear about the rate RBC direct will charge me if I want to take some of the distributions in the US RRSP acct. and move them into my Canadian RRSP acct. Anyone know where I can find this info spelled out?( The rep I spoke to used jargon I didn’t understand.)

  9. @John: If I were a RBC Direct client, I would sign up for a US Dollar RRSP. It doesn’t cost anything and you can avoid forced conversions into Canadian dollars of US dollar dividends received in the account. If you move money from your USD account into the CAD account, you will pay the hidden foreign currency markup. I believe RBC’s foreign exchange conversion rate is 1.5% each way.

  10. i use itrade, and this service won’t change practice of using norbert’s gambit. until they provide a USD registered account, there’s no need to pay for this.

  11. I moved to QuestTrade with my RRSP. Will have to do same with Spousal. QT offers US and CA dollar accounts and does not charge outrageous fees.

  12. I spent about an hour yesterday talking to Scotia reps about the US-friendly RRSP to try and clarify some ambuguities in the website description and fine print in the footnotes but gave up after getting several contradictory answers.

  13. Great information to know Ram. Damn those $30 fees per quarter though.

  14. @LDubz735: Unfortunately, not everyone is comfortable doing the Norbert Gambit. For them, the US-Friendly account may be a good alternative.

    @Larry: I believe the information here is correct. I have confirmation from another source at Scotia iTrade.

    @My Own Advisor: Yes, $30 per quarter seems steep but for someone converting lots of US dollars, this account could be an attractive option.

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  16. I’m just waiting for TDW to offer USD in RRSPs and TFSAs to consolidate my two accounts (TDW and RBC).

    • @Mike: Scuttlebutt has it that TDW has no immediate plans to offer USD RRSPs. Unfortunate, really because I’d really like to have an USD RRSP account. It is not a deal breaker for me but it’s a nice to have, certainly.

  17. If you are sitting on some dividend accumulations in a USD RRSP account and you would like to move those monies to a Canadian dollar RRSP account are you forced to use the institutions rate of conversion of the day or are there alternatives?

  18. @John: Unless you have a large enough ($5,000 or more) chunk of cash to convert into loonies, I’m afraid you will be forced to use the retail foreign exchange rate. If you have a large chunk of cash, you can do the Norbert Gambit to convert USD into CAD.

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  20. RBC Direct Investing is the simplest way to get around the fee grab. There is no cost for a RBC DI US$ RRSP account. Wonder how US Equity ETF’s and mutual funds handle exchange within their funds. Could be a hidden ripoff .


  21. “If I were a RBC Direct client, I would sign up for a US Dollar RRSP.”
    @Canadian Capitalist: No need – it’s just any registered account with the exception of RESPs for some reason. If you have an RBC Direct registered account they just turned it on one day – wham – it’s available. No separate account or sign-up required. In the same registered account you can simply hold both US and CAN cash. When buying or selling securities you can choose to purchase them using US or CAN cash or have the proceeds of a sale be US or CAN – so you can control if and when any conversion takes place.

  22. Wish they offer another 1% deal to switch!

    Haha – you and me both!


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  24. I think referring to RBC Direct’s product as a “USD RRSP” account makes it sound a little less interesting than it is. It’s actually an *integrated* dual currency account. This is a little nicer than what QTrade and others offer. Also, RBC Direct supports integrated dual currency TFSAs. They’ve been pretty innovative.

  25. That’s why I’m with questrade. They support both US and Canadian dollars in their RRSP.

  26. I spent a bit of time with customer service, so here’s an update on the US-friendly account for iTrade that, imo, gives you no reason to use / stay with them. Basically I’m going to look into transferring everything to RBC / Questtrade now.


    While there are still some ways around FOREX fees, it makes your life significantly harder. Assume this is your TFSA account:

    Scenario 1: You’re holding US stocks you want to sell so you can buy another US stock on the same day

    Old method: Sell US, buy US, call next day for wash trade. COST: 2 comission fees.

    New method: Register for a US friendly account and wait till it’s activated, then you sell and buy US the same day, then you cancel the US friendly account before the quarter ends. COST: 2 commission fees + $30 + lower spread rate (let’s just assume there’s no spread)

    Comment: you still can’t park USD in cash, but in RBC you can (can someone confirm this?).


    Scenario 2: you just contribued CAD cash to your TFSA and you want to buy a US stock (but want to avoid FOREX)

    Old method: buy CAD interlisted stock, call for interday transfer TSX –> NYSE (takes less than 2 minutes usually), sell on NYSE, buy US stock same day, and then call for wash trade. COST: 3 commission fees (in my experience, this will save you about $150 in FOREX fees if you’re buying $5000, remember, iTrade spread is the one of highest amongst the banks at 2%).

    New method A: similar to above, you register for US-friendly account and wait till it’s activated, make your trade, then cancel the account before the quarter ends. COST: 1 commission fee + $30.

    New method B (better method): contribute to your TFSA in kind instead. Call a service rep, and you can obtain their FOREX rate from yesterday (not subject to any spread), then you can negotiate at what price you want to contribute (yesterday’s closing price, lowest price, highest price, etc), then the rep will calculate how many shares you can transfer without over-contributing.


    Miscellaneous bits:

    Q. Even if I open a US-friendly account, how will I know what the FOREX fee will be?
    A. You don’t. The rep informed me the rate gets posted at the end of the day, and while I couldn’t get a firm answer on what the spread would be, he told me it would be signficantly less than 2%. Either way, he said, since the spread is uncertain, “I would leave a cushion of 2% just in case, so don’t over purchase shares”.

    Bottom line: I know some of the above maneurvers aren’t for everyone (esp. scenario 2), but at least I knew, down to the penny how much money I could work with and I could do it anytime. Now, I have to wait to register a new account, still pay some FOREX (even at a preferred rate) and still not know exactly what that rate is in real time, then have to cancel that account, and it cost more than my old method (ok, I really don’t care about paying $20-$30 more tbh). BUT IT’S SUCH A CLUNKY WAY TO TRADE, and this is coming from somone who rarely sells, and just makes a few purchases a year to balance my portfolio.

    Sorry for the long post. But for those of you with RBC / Questtrade, how do you like it? Is there anything I should be aware of that make things “annoying”, bc from where I’m sitting, there’s no reason for me NOT to switch to either of them.

  27. After reading the moneysmarts blog, the new US-friendly spread is 50 basis points , which is much better than the previous 200 basis points, but still unacceptable given that this late offering is still significantly inferior to what RBC / Questrade offers. Even if they won’t cover a single account transfer (assuming it’s approx. $100 / account), switching brokerages is still much more cost-effective in the long-term (equivalent to LESS than two USD-to-USD trades at about $10K in size).

  28. @LDubz: It’s truly a bummer that wash trading in a regular RRSP is not available anymore. I also hear your frustration with not knowing exactly what the exchange rate will be (because it an average for the current day).

    But it does seem that SCI rates are very good. I confirmed the information posted here (for 18/01) with two sources.

    Here’s the Bank of Canada rates for (18/01/2011):
    Noon: 0.9911
    Close: 0.9929
    High: 0.9935
    Low: 0.9849

    SCI rate: 0.9924.

    It doesn’t seem to me that SCI rate includes a markup. I’ll dig into this further and let you know how SCI rates stack up with BoC rates, which are reported without any markups.

  29. sun always shines

    I’m a client of Investorline @BMO. They kept telling me USD RRSP option would be available in Fall 2010. Nothing happened. Now they told me it’s coming in this Fall 2011. Since I have been waiting patiently, I asked if they oferred ‘wash trade'(I had explained in details what I intended to do just in case they don’t understand). Guessed what the reply was? They told me it’s illegal and it’s violating the Security Commission regulation. I’m looking forward switching to either Scotia itrade or RBC.
    My questions are: How long it would take to complete the transfer request if it’s transfer in kind (RBC told me it might take up to 6 weeks)? Is that true? Anyone has the experience? Can I do the tradings during the transferring process? I just do not want to locate my investments during the account transfer process if it will last 6 weeks.
    Foreign Ex rates are too much at Investorline. I tried to sell a USD stock with gross amount of approx $5000 USD. After they coverted ot Canadian dollars, the USD $5000 was equivalent to approx $CAD 4500.00. Not sure if it’s the system error. Because of this deep spread on the exchange, I decided not to execute the order.

  30. Well I’ll share a couple of experiences just FYI:

    1. RBC Direct will not let me do collars in registered accounts. That is, they will let me buy stocks and funds, sell covered calls, and purchase married puts. They will not let me do both to create a collar. Until recently I could not purchase married puts for protection without calling an options trader to do the trade, although the did fix that.

    2. The last account I set up with RBC (an RESP) took weeks. I had to fill out paperwork and mail it to them – I sent it FedEx and it still took weeks.

    3. I just set up a margin account and TFSA with Questrade and it took an hour. All online. I scanned my driver’s license and uploaded it to their site. I funded it from RBC with online bill-pay. That was Wednesday. Yesterday I received my login information and this morning the money is in the account and ready to trade.

    I have not yet traded with Questrade enough to see how they do, but so far the account opening process has been excellent. I am starting with just a basic 5k TFSA to try them out, although I have opened a margin and an RSP account as well. Questrade also lets me do USD and CAD in registered accounts. I will let you know how it works out.