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You can swap something into your RRSP for an equivalent amount of something else, but the bank brokerages will charge you do do this (looks like $35-$45 is common). TD Waterhouse has a loophole that may be useful in some cases. If both sides of the swap are TD Mutual funds, there is no swap fee. So if you are able to liquidate both sides, you could purchase one of TD's money market funds.

Liquidating may not always be possible, but since I think swapping into an RRSP triggers capital gains anyway, there may be many cases where it is practical. If you just want to swap two equities (say swap GOOG in an RRSP for MSFT outside), selling them and rebuying on the other side is four transactions and even at $10 trades you don't save anything. But if some of the sides are cash or mutual funds this could save a few bucks. I checked the fee schedules for a couple of the other big-bank brokerages, and didn't see any similar loophole.

I'm planning on using this to get $US into my RRSP. Once I have them in my US cash account, I can buy the US Money market fund, and buy the Canadian fund in the RRSP. TDW would swap them for free; I can use the US fund now in the RRSP to buy what I want, and I can liquidate the Canadian fund now on the unregistered side. I've confirmed this with TDW support.

Speaking of RRSP swaps at TDW, their current fee document (PDF, dated January 2/2010) has an error. It states the $45 swap fee is per security. It is actually per swap. Apparently TDW had planned to switch to per-security this spring, but changed their mind; the fee document must have been anticipating this and hasn't been fixed. Could we actually have found the limits of a bank's gall in jacking up fees... :)
 

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You can swap something into your RRSP for an equivalent amount of something else, but the bank brokerages will charge you do do this (looks like $35-$45 is common). TD Waterhouse has a loophole that may be useful in some cases. If both sides of the swap are TD Mutual funds, there is no swap fee. So if you are able to liquidate both sides, you could purchase one of TD's money market funds.

Liquidating may not always be possible, but since I think swapping into an RRSP triggers capital gains anyway, there may be many cases where it is practical. If you just want to swap two equities (say swap GOOG in an RRSP for MSFT outside), selling them and rebuying on the other side is four transactions and even at $10 trades you don't save anything. But if some of the sides are cash or mutual funds this could save a few bucks. I checked the fee schedules for a couple of the other big-bank brokerages, and didn't see any similar loophole.

I'm planning on using this to get $US into my RRSP. Once I have them in my US cash account, I can buy the US Money market fund, and buy the Canadian fund in the RRSP. TDW would swap them for free; I can use the US fund now in the RRSP to buy what I want, and I can liquidate the Canadian fund now on the unregistered side. I've confirmed this with TDW support.

Speaking of RRSP swaps at TDW, their current fee document (PDF, dated January 2/2010) has an error. It states the $45 swap fee is per security. It is actually per swap. Apparently TDW had planned to switch to per-security this spring, but changed their mind; the fee document must have been anticipating this and hasn't been fixed. Could we actually have found the limits of a bank's gall in jacking up fees... :)
I'm curious as to how much $$ you are converting, given the amount of research to get the best rate?
 

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Discussion Starter #3
It may not all be at one time, but the total will likely be six figures - this is a one time portfolio conversion from my old bank mutual funds to index funds, some of which will be $US ETFs.

Every now and then I get interested in something, and my spare time is cheap. It is always fun to figure out how things work. Once I've got everything done I can collapse into apathy again like a proper potato... :)
 

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raven this is all very cunning but i believe you are missing the regular td waterhouse currency conversion fee that will be charged when you swap your US money market fund in your US unregistered account for your canadian money market fund in your canadian rrsp account.

at some point in this crossed pair tdw is going to have to convert your currencies & they will i suspect charge you their regular conversion fee on the amount of money involved. I don't know whether the fine details of the actual conversion will ever appear in your accounts or in your statements. In addition, not every tdw rep is going to understand this delicate point let alone be capable of explaining it to you. It was a good idea ... but ... coises ... foiled again.

plus you're talking about saving $25, unless you happen to already own the US dollars in non-registered account plus the canadian dollars in rrsp account. If not, you'd have to sell enough in both accounts to raise the necessary cash, before converting this cash into money market funds in both accounts. A $45 swap fee less 2 transactions at $10 each = $25.00.

saving 25 bucks once or twice in a lifetime is not worth posting about imho and i'm only replying because i'm uneasy about people trying to launch loophole attacks on a brokerage house that does a good job & deserves fair play.
 

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raven this is all very cunning but i believe you are missing the regular td waterhouse currency conversion fee that will be charged when you swap your US money market fund in your US unregistered account for your canadian money market fund in your canadian rrsp account.
I havent' done this exact swap, so I don't know if swapping mutual funds incurs no fee. But I have swapped XIU inside a RRSP for VEA in a taxable account and there was no currency conversion. Yes, they did charge me a swap fee but I gladly paid it considering XIU dividends are treated better than VEA dividends in taxable accounts.

One thing to watch for: make sure the market value of the security in RRSP is less than or equal to the market value of the securities in taxable accounts. Also, if you have capital gains in your taxable accounts, you'll have to declare it in your tax return. Capital losses cannot be claimed for moving securities into a RRSP account.
 

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Discussion Starter #6
I'll double-check, but they aren't selling the money market funds or converting, any more than they would be selling and repurchasing two stocks that you wanted to swap. Presumably they are just doing some journaling bookkeeping in the back room, and this is likely why they offer this only when both pieces are their own TD money market funds.

This isn't an "attack" - their fee schedule clearly indicates "TD Mutual Funds excepted". I confirmed it with them - it was actually they who got it wrong when I first asked. The eventual response from TD Support was "You are correct; I have confirmed with our RSP department that if the SWAP transaction involved only TD mutual funds, the fee would be waived. Also, TD money market funds do not have early redemption fees."

In my case I really will have $US cash on one side that I'll need in the RRSP for purchases, and I do save the $45 fee that I would incur if I bought the ETFs unregistered and swapped those into the RRSP. As I mentioned, this is only useful for cash, or things that you would have been liquidating anyway. There may be other TDW customers who will be in a similar situation at some point (annual rebalancing a couch-potato portfolio, perhaps), and I thought I'd mention it. One of the things I've enjoyed about this forum is the little "hey, I did not know that" tidbits I get from reading the posts. If this one is so trivial as to be pointless I apologize to the grumpier segment of the community... :)
 

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what's grumpy is parties who complain about "the gall" of a decent brokerage house that's offering a good service ...
 

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I don't think it is especially grumpy to make a humorous aside about the fees charged by those shrinking violets, the major Canadian banks. I too think TDW is a decent brokerage house that offers a good service - after all, I chose and signed up with them just this summer.
 

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I don't think it is especially grumpy to make a humorous aside about the fees charged by those shrinking violets, the major Canadian banks. I too think TDW is a decent brokerage house that offers a good service - after all, I chose and signed up with them just this summer.
Don't listen to "grumpie_pie".

I think it's great that you are investigating this thoroughly and posting - this will help others as well.

If you want to write up your finding, you are welcome to post on my blog. I love this kind of stuff - very useful.
 

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CC you are almost never incorrect but this is one of those rare instances. Yes there would have been a currency conversion fee but you didn't see it. Your VEA would have had to be evaluated in canadian dollars and at that point you would have paid the buy rate for CAD including the famous currency conversion fee. Or vice versa if they had carried out step one of the transaction in the rrsp account - the XIU would have had to be evaluated in US dollars.

the problem is that these details are set forth sketchily by the brokers on their statements & confirms. Not every step is described in detail. In the above XIU-VEA swap the client would have seen one US dollar figure; and the client would have had to work back from that to the rate that he was being charged; and then compare that rate to the wholesale rate (very close to, but not exactly, the bank of canada noon rate on that particular day), in order to determine whether he was or was not being charged a currency conversion fee.

as for pillars & his rude remarks, the raven scheme to bypass both the swap fee & the currency conversion fee is just plain not going to work. It's misleading to other investors to pick it up, and it's deliberately destructive to describe it as helpful. Small wonder that pillars' blog is so under-visited, as he has complained himself. No serious investor is going to spend time looking at hare-brained schemes from amateurs.
 

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CC you are almost never incorrect but this is one of those rare instances. Yes there would have been a currency conversion fee but you didn't see it. Your VEA would have had to be evaluated in canadian dollars and at that point you would have paid the buy rate for CAD including the famous currency conversion fee. Or vice versa if they had carried out step one of the transaction in the rrsp account - the XIU would have had to be evaluated in US dollars.
Yes, VEA's value is computed in Canadian dollars but you can choose any price between the day's high and low for VEA for a swap or in-kind contribution (I did the swap after market hours). The exchange rate for valuing the swap is the USD conversion rate reported in the Account Details->Balances page. This is how contribution value is determined for in-kind transactions as well. [Edit: This may not be correct. See this post.]

From a financial point of view, TDW doesn't care at what prices these transactions are done. For them, one account held 200 shares of XIU and another 100 shares of VEA and after the swap, it is the other way around. They made the swap fee of $35 and that's it. The conversions into Canadian dollars are strictly for accounting and tax purposes. In my experience, TDW tends to use the rate displayed on their pages for this.
 

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Discussion Starter #12
CC probably has impeccable record-keeping, so he may be able to check this. Again, I wouldn't think they are actually selling and rebuying the two stocks involved in the swap. They would need a rate to determine the value of the VEA and how much XSP to swap for it, but this would be accounting, not forex conversion, presumably similar to the neutral rate they display on your TDW online account "Consolidated Balance" (which seems to be the previous day's BoC noon rate).

Let's say CC didn't take his own tax-optimizing advice and had 1000 shares of VTI unregistered, and 1000 XSP in his RRSP. Coming partially to his senses, he decides to swap 100 VTI into his RRSP. Let's say at whatever rate they are using this works out to 200 shares of XSP. They swap the bookkeeping on the shares, and CC now has 900 VTI and 200 XSP unregistered, and 100 VTI and 800 in the RRSP. He still has the same 2000 shares he started with, and can check the share totals before and after. If TDW is doing anything else, they would either have to sell some of the shares to collect their fee, or debit an additional cash charge in addition to the $45 swap fee. The actual rate used wouldn't affect anything except the specific quantities swapped.

This would seem to make sense for mutual funds or other fractional things that they can balance exactly. For integral unit stocks the remainder fraction would presumably represent a tiny RRSP contribution or withdrawal, but perhaps an equivalent bit of cash is included in the swap to balance it.

I'll check this example with TDW, but just thinking about the mechanics of how they'd have to do this I'd be surprised if the effect isn't as above even if the details differ.
 

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Oops, CC's post wasn't there when I wrote mine.

CC - Did they transfer a integer number of stocks, and if so how did they handle the fraction? Did a bit of cash get included in one direction, or did it generate a tiny RRSP transaction?
 

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CC those figures presented in Account Details Balances and Consolidated Balances for US exchange rates set forth the average of yesterday's tdw BUY price for canadian accounts and the average of yesterday's tdw SELL price for US accounts.

in other words td waterhouse's regular currency exchange fee is included in these figures. Historically the tdw spread has stuck around 1.90. This is a better rate than obtainable in any td bank, but for a large amount of money it is an onerous fee, which is why the gambit periodically gets discussed.

the route you took for the XIU/VEA swap is unusual in that it was done after hours & the tdw representative apparently made a mistake. It's a common mistake. After hours or next day's swaps are supposed to be executed at the day's closing price only, or the previous day's closing price only, as the case may be. It is only during trading hours that the client is permitted to pick & choose between the day's high & the day's low.

it's entirely possible that, in picking between the day's highs & lows for the 2 entities you were swapping, you were able to offset or negate some or all of the normal currency exchange fee that is built into the currency exchange fees that tdw quotes. But the fee was there all the same.

as for the representative's mistake, the reps are well-trained but it's almost impossible for them to keep on top of all the millions of details they are expected to know. It's not uncommon for a rep to make the above error. But make it he or she did - and imho it's not a good idea to encourage other investors here in this forum that they can count on the same arrangement.
 

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Small wonder that pillars' blog is so under-visited, as he has complained himself.
Just to clarify, I have pretty decent traffic numbers. It was the lack of of new subscriber growth that I was lamenting.

This problem seems to have corrected itself, since the growth over the last few months has been quite good. I believe the promotional efforts for my book are the main reason for this.
 

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CC those figures presented in Account Details Balances and Consolidated Balances for US exchange rates set forth the average of yesterday's tdw BUY price for canadian accounts and the average of yesterday's tdw SELL price for US accounts.

in other words td waterhouse's regular currency exchange fee is included in these figures. Historically the tdw spread has stuck around 1.90. This is a better rate than obtainable in any td bank, but for a large amount of money it is an onerous fee, which is why the gambit periodically gets discussed.

the route you took for the XIU/VEA swap is unusual in that it was done after hours & the tdw representative apparently made a mistake. It's a common mistake. After hours or next day's swaps are supposed to be executed at the day's closing price only, or the previous day's closing price only, as the case may be. It is only during trading hours that the client is permitted to pick & choose between the day's high & the day's low.

it's entirely possible that, in picking between the day's highs & lows for the 2 entities you were swapping, you were able to offset or negate some or all of the normal currency exchange fee that is built into the currency exchange fees that tdw quotes. But the fee was there all the same.

as for the representative's mistake, the reps are well-trained but it's almost impossible for them to keep on top of all the millions of details they are expected to know. It's not uncommon for a rep to make the above error. But make it he or she did - and imho it's not a good idea to encourage other investors here in this forum that they can count on the same arrangement.
There is only one way to settle this and I had to call it in. Here's what I found:

1. The exchange rate of the in-kind contribution or swap will be the current TDW buy rate assuming a conversion is made. So, humble_pie is right. It includes the spread that TDW charges.

2. You are allowed to pick a price between the high and the low of the current day (even after-hours). But if you do a swap or in-kind contribution tomorrow, it will be done at today's closing price.

According to the rep, this is TDW's "official" way of doing things after leaving me hanging on the phone for 15 minutes. And as hard as it is for me to admit it, humble_pie is largely right on this one :)
 

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Oops, CC's post wasn't there when I wrote mine.

CC - Did they transfer a integer number of stocks, and if so how did they handle the fraction? Did a bit of cash get included in one direction, or did it generate a tiny RRSP transaction?
You can only transfer whole number of shares. IIRC the swap generated a tiny bit of RRSP contribution.
 

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dear CC you are largely right except for this part:

" You are allowed to pick a price between the high and the low of the current day (even after-hours). But if you do a swap or in-kind contribution tomorrow, it will be done at today's closing price."

alas a client is NOT officially allowed to pick between highs & lows after hours, not even on the current day. To pick his price, he must phone his swap request during trading hours.

the rep whom you reached made a mistake. And this after waiting for 15 minutes, tch tch. And to CC, quadruple tch.

i myself have noticed that quite a few tdw reps are confused over this issue. But when they check it out, they always discover that them rules is wot i've posted.

on a practical note, client cannot ask for generic high or generic low of the day. Client must specify an exact price & must choose among actual prices that have already traded that day. Therefore, do not conduct swaps until about 3:45 pm, when most of the trading day's range has already occurred. If you are a client who has to wait 15 minutes for a phone call to be answered, it would be wise to start working on this project by 3:25 or 3:30 pm.

also in a practical note, this thread is about a fantastical scheme to defeat a broker who has "the gall" to charge a fair fee and a fair exchange rate. This particular scheme is not going to work, although the built-inclusion of currency exchange fees is subtle & complicated enough that some clients will never be able to grasp it.

recently i've noticed a surprising number of cmf members who post messages about threatening their discount brokers, undercutting their brokers, scheming to avoid their brokers' fees or lower their commissions or both. This seems to be a phenomenon of recent weeks only.

some of the big onliners offer a stunning range of services - research tools, overseas trading in several different currencies, fast & perfect order execution, even charmers like tdw's nova scotia platoon of gallant lads & lasses who will gladly help any online tdw client any time of the day or night 24/7.

meanwhile the cheaper deep-discount onliners are definitely offering good value for a lower price, even if their services are understandably less extensive.

so i am wondering whence cometh this recent trend in cmf to obsess about undercutting online brokers' fees ...
 

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dear CC you are largely right except for this part:

" You are allowed to pick a price between the high and the low of the current day (even after-hours). But if you do a swap or in-kind contribution tomorrow, it will be done at today's closing price."

alas a client is NOT officially allowed to pick between highs & lows after hours, not even on the current day. To pick his price, he must phone his swap request during trading hours.

the rep whom you reached made a mistake. And this after waiting for 15 minutes, tch tch. And to CC, quadruple tch.
Okay. Can someone please call in TDW and report what the rep says here? I'm happy to stand corrected but I can only report what I was told was the "official" way of doing things.
 

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Discussion Starter #20
My impression was that humble_pie was talking about a cost to me - he was saying things like "...charge you their regular conversion fee on the amount of money involved...". As long as TD isn't siphoning off something for themselves, the actual rate used for the conversion isn't that important, and I wouldn't really care exactly how it is determined - I'm on both sides of the transaction. If they use the buy rate then slightly fewer of the US shares wind up in the RRSP than if they use a neutral rate, but more of the Canadian shares stay in the RRSP. The total ownership remains the same.

If TD's historic spread was 1.90%, they're doing better these days. WebBroker has been consistently quoting rates that seem to work out to around 1.57% for small amounts (it drops in steps to about 0.67% over $65,000). It may have something to do with TD's Borderless bank accounts - Borderless customers seem to get that same 1.5-ish rate that WebBroker quotes. The help screen for the conversion rate given for the TDW Consolidate Balance screen says it is based on "...an average of the previous business day's exchange rate." My guess is that this is an average of their internal spot pricing, not the customer sell rate. The value showing on my screen right now for the Nov 11 balance is 1.0017, which coincidentally or not is also the Bank of Canada noon rate for Nov 10. I'll check it again Tuesday once the confusion of weekends and stat holidays has rolled past.
 
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