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Discussion Starter #1
I've been trying to help my father in law execute Norbert's Gambit on iTrade. I don't have an iTrade account so I am not exactly sure what steps he needs to use to complete the gambit. I am trying to do this remotely so I'm hoping someone here can give specific instructions I can send to him.

The current situation is that he has purchased DLR in his non-registered account and the trade has settled. My understanding is that iTrade doesn't have separate CDN and US accounts but it is possible to hold US dollars in the account and they won't be automatically converted to CDN.

He has tried to enter a sell order for DLR.U but he gets an error that he doesn't have the security he is trying to sell in his account.

Can someone that has done Norbert's Gambit in an iTrade account recently provide the steps required to complete the gambit?
 

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Firstly, Scotia iTRade now has both CAD and USD sides to their registered accounts. They are not separate accounts, only sub-accounts of the same account. If your father has not yet enrolled for a USD side, then he has to do that first. It is not automatically provided just because he has a CAD RRSP account.

I've never used DLR nor DLR.U in Scotia iTRade so cannot help with that but I think what he is missing is that he has to first "journal" DLR over to the USD side of the account before he can sell it as DLR.U. There is a form for journaling securities over to the other (USD) side of the account but it may be faster to phone in and have a CSR/agent journal it over for him. The agent may also be willing to help him execute the DLR.U trade without extra commission cost.
 

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I've been trying to help my father in law execute Norbert's Gambit on iTrade. I don't have an iTrade account so I am not exactly sure what steps he needs to use to complete the gambit. I am trying to do this remotely so I'm hoping someone here can give specific instructions I can send to him.

The current situation is that he has purchased DLR in his non-registered account and the trade has settled. My understanding is that iTrade doesn't have separate CDN and US accounts but it is possible to hold US dollars in the account and they won't be automatically converted to CDN.

He has tried to enter a sell order for DLR.U but he gets an error that he doesn't have the security he is trying to sell in his account.

Can someone that has done Norbert's Gambit in an iTrade account recently provide the steps required to complete the gambit?


variations of this ^^ are common

the FIL should obtain accurate information directly from scotia iTrade. It may be necessary to journal his DLR shares over to his US account & when that's accomplished he'll be able to sell em online.

or

at some brokers - BMO for example - it's necessary to phone to sell DLR.U but BMO kindly charges only a web commish for this sale.

i believe it's better for the FIL to speak directly to iTrade reps. They won't charge to give out information that wlll put him on the right track. It's a bit risky to rely on several remote transmissions of info coming from a series of parties in the chain.
 

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Discussion Starter #4 (Edited)
Thanks AltaRed and humble_pie.

I found this thread that seems to confirm that a journal is necessary: https://www.canadianmoneyforum.com/showthread.php/137828-Exchanging-a-large-sum-of-CAD-into-USD-at-iTrade-using-Norbert-s-Gambit?highlight=iTrade+Norbert's+Gambit

The problem I see with calling in and talking to a customer rep is that they won't understand that he is trying to do a Norbert's Gambit (and he doesn't completely understand what he is trying to do as this is his first time doing it). If it is just a matter of calling in and asking them to journal the shares from DLR to DLR.U that isn't as much of an issue.

If anyone can provide information on how to do the journal of the shares online I'd be interested in that.
 

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^^

ok we seem to be heading in the right direction

i wonder if it's true though that scotia iTrade reps "won't understand" a gambit trade.

what i see is that TD & BMO reps are wondrously, marvellously knowledgeable & helpful nowadays. Was not always the case back in the day but has been stable sunny-side-up for a few years now.

we've read here in cmf forum that royal bank discount reps are also knowledgeable. So i just assumed that scotia iTrade reps were also in the pack.

tell your FIL Courage as we say here in quebec (koo RAHJE) Once he gets the hang of gambit trading he will never again, in his lifetime, have to pay an FX fee!
 

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Discussion Starter #6
Doing a Norbert's Gambit is essentially doing an end-run around the brokerage's FX fees. So the reps might be knowledgeable about what is being attempted but they also might have an incentive to not make things as straightforward as possible to someone that sounds like they don't know exactly what they are doing.
 

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i see your point ^^

but we passed through that stage - duelling with the brokers - many long years ago. There was even a time, back in the day, when half the TD's call centres were totally refusing gambit trades; so clients had to migrate their phone calls to the other call centres that were cooperating ... :peach:

it's been a few years now that TDDI reportedly struck a special committee consisting of senior managers plus the best among the licensed reps, all to figure out the best way to handle the steady flow of gambit traders.

after all, gambitting currencies is not illegal. It's just plain old arbitrage. Buy in one market, sell in another market to gain an advantage. Been around hundreds of years.

eventually, committees & all, the brokers settled down to realize that a) only a small minority of clients will ever actually gambit; b) it isn't illegal & brokers cannot stop the practice; c) since brokers couldn't beat the gambit traders, they decided to join em while charging as healthy a fee as possible & offering excellent service.

your FIL is doing fine for a first time arbitrage trade. By fine i mean he set off in the right direction, he slowed down when he came to an impasse & asked for your help, most importantly, he didn't make any mistakes. From now on gambit trading should be easy for him.
 

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Thanks AltaRed and humble_pie.

I found this thread that seems to confirm that a journal is necessary: https://www.canadianmoneyforum.com/showthread.php/137828-Exchanging-a-large-sum-of-CAD-into-USD-at-iTrade-using-Norbert-s-Gambit?highlight=iTrade+Norbert's+Gambit

The problem I see with calling in and talking to a customer rep is that they won't understand that he is trying to do a Norbert's Gambit (and he doesn't completely understand what he is trying to do as this is his first time doing it). If it is just a matter of calling in and asking them to journal the shares from DLR to DLR.U that isn't as much of an issue.

If anyone can provide information on how to do the journal of the shares online I'd be interested in that.
I think Scotia iTRade reps understand NG just fine, but the first step is the need to journal over DLR to the USD side of the account. I've done a number of journals of stocks from one side to the other, either by phoning in (no big deal) or online.

To do this online, he has to first have a USD side to his RRSP account. If he does not have that yet, he must first 'enroll to enable USD side of registered account". To do that, he goes online, then....
1. go to his RRSP account in the dropdown menu
2. Click on Additional Services
3. Click on the link "enroll to enable USD side of registered account" and click on the RRSP box on that page. I don't know whether that takes effect immediately, or takes a business day or two....

If he already has a USD side to his RRSP account, then.....
A. go to his RRSP account in the drop down menu
B. click on Additional Services
C. click on the link "transfer securities and funds between accounts"
D. fill out the form provided making sure he is moving DLR and number of units from RRSP CAD to RRSP USD (it is pretty simple)

I don't remember if this takes effect immediately, or needs a business day or so for the transfer to happen. It likely takes overnight (1 business day) but may be instantaneous.
 

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Discussion Starter #9
Thanks AltaRed.

This is in his non-registered account. Do all the same menus exist on the non-registered side?
 

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This is in his non-registered account. Do all the same menus exist on the non-registered side?
Yes, sorry. It should remain the same. I already have a USD side to my Cash account, so I don't have an option to enroll in a USD side. For some reason, I mis-read your original post....
 

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Discussion Starter #11
My FIL called in this morning and the customer rep told him to use the online form to do the transfer. The rep said to put a note in the form to journal the shares to DLR.U on the US side. That should hopefully happen overnight and if everything goes well he should be able to sell DLR.U tomorrow.
 

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Discussion Starter #12
Ok, final update from my FIL. He called in to do the transfer from DLR to DLR.U on Monday and was told he could use a form to do that. He did and he waited until today (Wednesday) and didn't see DLR.U in is account so he called in again.

This time the customer rep told him they could do the journal over the phone for him and he could do the sale of DLR.U online before the end of the day. The rep said that if he didn't do the sale on that day overnight the DLR.U would be journaled back over to DLR.

So once the rep did the journal from DLR to DLR.U he was able to do the sale today and the cash appears to have stayed in US dollars in his account.

It is a bit of a process but at least he could get it done without paying the $65 broker assisted commission.
 

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This time the customer rep told him they could do the journal over the phone for him and he could do the sale of DLR.U online before the end of the day. The rep said that if he didn't do the sale on that day overnight the DLR.U would be journaled back over to DLR.


every broker has got one or more tiny weird nano-glitches in the DLRs. These vary from broker to broker, depending upon an individual broker mainframe & architecture; however i have never heard of any broker that does not have a DLR/DLR/U quirk or two.

is why i suggested that the FIL should contact the broker reps early in the game, in order to learn what the scotia iTrade DLR nano-glitches are & how to work around them.

minor atypical positionings during the day are common in broker systems. These revert back to system default positions overnight. Option margin positions do this, for example.

we should keep in mind that DLR.U is a USD denominated stock that trades in the tiny USD section of the TSX only. It does not trade on any US market wheresoever. It is this detail which is causing the DLR/DLR.U nano-glitches at most brokers.

it's totally reasonable to believe that the scotia iTrade architecture is able to extend DLR.U over to the US side of an account where it can be traded during trading hours; but overnight the system requires that DLR.U then revert back to its canadian side 'home" since it is a canadian stock, not an interlisted stock.

in this case - so helpfully described by the OP - it sounds as if the 2nd rep the FIL reached had more experience & was more knowledgeable than the first rep. Such a range of knowledge & experience among licensed reps is also very common at discount brokers.

all's well that ends well, as they say. Next time doing a gambit pair will be a breeze.
 

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DLR.U is a USD denominated stock that trades in the tiny USD section of the TSX only.
Do we imagine that they therefore play the same monkey business with ZSP.U? I think that could be a significant concern. If they are singling out DLR, then they are just being shits. If they are genuinely unable to remember which section a holding is meant to reside in, I would say that they are kinda dumb shits.
 

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Do we imagine that they therefore play the same monkey business with ZSP.U? I think that could be a significant concern. If they are singling out DLR, then they are just being shits. If they are genuinely unable to remember which section a holding is meant to reside in, I would say that they are kinda dumb shits.
Not sure what you are talking about but I have ZSP.U in my portfolio. It is not the same CUSIP as ZSP and is therefore not an interlisted stock for an NG.
 

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It is not the same CUSIP as ZSP and is therefore not an interlisted stock for an NG.
That's not my point. It is a US$ issue, traded only in TSX. So does iTrade automagically journal it to your C$ account against your best interest, therefore bagging the currency exchange premium on all your dividends? If they don't, then they seem to be singling out DLR.U, which would be a shitty move.
 

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You picked on ZSP.U, a Canadian domiciled ETF, traded on the TSX in USD. People thus buy and hold ZSP.U on the USD side of their account (as I do in Scotia iTRade) and get distributions paid in USD by BMO in that side of the account. ZSP.U really is no different than any other holding.
 

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ZSP.U really is no different than any other holding.
So does iTrade REALLY move DLR.U between sections without direction to do so? If so, it would make ZSP.U different to DLR.U.

Obviously we don't expect ZSP.U or, indeed any other holding, to be automagically journaled around between sections without our specific direction to do so. Reports are that iTrade nonetheless actually does this with DLR.U for some reason that I do not fully understand. Is it actually true? If it is, what makes it right and proper for them to move DLR.U but not obvious that ZSP.U should be subject to the same logic?

And in case it is not clear, it is this information I am trying to make sense of:

The rep said that if he didn't do the sale on that day overnight the DLR.U would be journaled back over to DLR.
Is that in fact true that this happens with iTrade?
 

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That's not my point. It is a US$ issue, traded only in TSX. So does iTrade automagically journal it to your C$ account against your best interest, therefore bagging the currency exchange premium on all your dividends? If they don't, then they seem to be singling out DLR.U, which would be a shitty move.

there are no dividends in the DLRs. They were created by Horizons strictly for gambit traders whose brokers required the T+3 (nowadays T+2) settlement period for the buy side, before an investor could sell the gambit currency carrier stock. Such brokers were then - & remain today - the majority of brokers. Only BMO & roybank have mainframes that permit instant online gambit trading.

licensed reps at all brokers other than BMO & roybank have workarounds that permit them to override the blockages to instant gambit trading caused by their mainframe architecture. However each broker has its own individual policy about the commissions it will charge, once the reps get involved in live rep-handled trades.

scotia iTrade appears to be blameless in the manoeuvre that was described in this thread. We should all be grateful to the OP for posting his FIL details, since not too much had been known about how-it-works at scotia iTrade. Now we have better information on gambit trading at scotia, thankx!
 
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