TD Waterhouse charges 2.8% for DRIP of US$ RRSP holdings

39087 Views 78 Replies 24 Participants Last post by gibor365, Feb 19, 2017

mrPPincer

Discussion Starter · Oct 7, 2012

I recently heard TDW charges hidden double currency conversion fees to drip stocks traded in US dollars inside registered accounts so I took a look at my latest dividends.
(This was inside my RRSP but I assume it works the same way with a TFSA or RESP at TDW).

Here's my numbers;

325 US$ in dividends
219 US$ stated cost of dripped shares

106 US$ is what should have been left over and converted to CDN$ before double currency conversion fees are considered, right?

106 X 0.9645 (TDW's cost to convert to CAD)
= $102 CDN
Actual dollars left in my account after the drip was $96 CDN

$102-$96= $6

So six bucks is what it cost me to let TDW drip my US holdings that day.

219 X 0.9645 would have been $211 CDN more in my account if I had not dripped.

$6 divided by $211 = 2.8%

So TDW is charging me 2.8% more to drip those shares than if I would just let them ding me just once and convert 100% of the dividends to Canadian dollars!

I didn't want TDW to do any currency conversion for me at what they charge, but until they get their trading software fixed my only other alternative would be to go elsewhere, and who's to say there won't be issues with the next discount brokerage I try. :upset:

61 - 79 of 79 Posts

Eclectic12

· #61 · Jul 4, 2013

m3s said:
Let's settle this once and for all then ...

Now the challenge is for someone with TDWH to post an unadulterated screen shot of their POT 04/11/13 dividend instead of dancing around the subject

Okay ... it took me a while to find as it's a single line item showing on my May statement dated May 2nd, 2013.

Using what was delivered as CAD to my account, for 100 shares of POT I received $27.79 CAD. Unless my math is wrong, using mrPPincer's BoC closing rate, that works out to 1.8% or so.

Now to see if any other from Scotia, RBC etc. post their results are well.

Clearly 0% at Questrade is going to be a front runner, if not outright winner. (Though like m3s, I'm really surprised that they wouldn't take at least something.)

m3s

· #62 · Jul 4, 2013

Eclectic12 said:
Clearly 0% at Questrade is going to be a front runner, if not outright winner. (Though like m3s, I'm really surprised that they wouldn't take at least something.)

We need a few more examples from Questrade as well to verify it but I can always post a screenshot if there is any doubt. I would expect 0% if it was paid out in USD at Questrade but since it was converted to CAD this is surprising. Like I said you could always get 0% regardless by having it paid out in USD.

humble_pie

· #63 · Jul 5, 2013

the POT dividend is indeed only one example but it looks like m3 has made off with the very best deal at questrade! u can't get better than bank of canada noon rate.

now our sky warrior can relax on a beach near mombasa
happy to have bested humbee pie
in fair combat

each:

mrPPincer

Discussion Starter · #64 · Jul 5, 2013

humble_pie said:
the POT dividend is indeed only one example but it looks like m3 has made off with the very best deal at questrade! u can't get better than bank of canada noon rate.

Yes humble, from what we've seen so far Questrade seems to be the best deal for registered USD divys, but m3s didn't get the BoC noon rate.

m3s got the BoC day's closing rate, not the noon rate.

Which stands to reason, don't you think?

If you were a brokerage handling millions of $ worth of dividends, would you close the day's files using the most current numbers or would you use the four-hour old numbers when you settle the books at day's end?

humble_pie

· #65 · Jul 5, 2013

general point of info:

nobody uses bank of canada closing rate. All financial institutions use the noon rate.

bank of canada rates are amalgams of world's leading money-centre banks, as their treasury floors trade among each other & report live. XE dot com follows extremely closely.

more world money-centre banks are open at noon, which is why noon rate is the bellwether.

europe & in particular all-important London are still going at noon EST but are long closed at the hour of BOC closing rates. Even Dubai financial centre may be still trading at noon, but long closed at 5 pm EST.

mrPPincer

Discussion Starter · #66 · Jul 5, 2013

humble, ok, interesting, but..

the numbers that Questrade did use for their USD dividend conversion were BoC closing rates.

So I guess to put this to rest we could use some more numbers on Questrade USD dividends from inside a CDN$ registered account.

PatInTheHat

· #67 · Jul 5, 2013

Anyone mind giving me cliff notes? Safe to drip with QT?

Jungle

· #68 · Jul 5, 2013

Yes safe to drip with QT. However they don't honor drip discount which some popular CDN shares offer, however depending on how much you trade and the number of shares, the lower comissions at QT might make up for the lost drip discount.

I have noticed that TDW is very slow to post DRIP activity in my TFSA, sometimes taking 1-2 weeks. With Questrade, it usually shows up a day later.

Xoron

· #69 · Aug 21, 2013

Normally, with CIBC IE, I wash my USD buy and sell trades that are made on the same day. I just need to talk to a trader by 3pm to make it happen for the day's trades. (and they'll do the same thing using a USD MM fund if I want)

But, back in June, I forgot to do the FX Netting. Figured I'd share the FX rates I got on my trades that day (and unless I'm looking at this wrong, they're pretty good).

That day I had sold two different securities in my CAD RRSP Account. The actual FX rate on both trades were:

EXCHANGE RATE 1.01950

The same day, I purchased four different securities in my CAD RRSP account. The actual FX rate on the 4 trades were:

EXCHANGE RATE 1.02150

So that looks like a 0.2% difference. Pretty competitive without me doing anything other than placing the trades online. Maybe CIBC has listened (or my calculations are off :rolleyes2

?

Eclectic12

· #70 · Aug 22, 2013

m3s said:
We need a few more examples from Questrade as well to verify it ... I would expect 0% if it was paid out in USD at Questrade but since it was converted to CAD this is surprising.

Like I said you could always get 0% regardless by having it paid out in USD.

To add to the list of TDW currency conversions, the web interface is showing line items:

POTASH CORP OF SASK INC
CONVERT TO CAD @ 1.01750

and

AGRIUM INC
CONVERT TO CAD @ 1.02400

I have to run the calculations to see what everything works out to and I know that until the monthly statement is changed, the one these will included on won't mention that a conversion took place or at what rate.

Cheers

humble_pie

· #71 · Aug 22, 2013

Eclectic12 said:
... until the monthly statement is changed, the one these will included on won't mention that a conversion took place or at what rate.

eclectic the monthly statements from brokers are *not* going to be changed.

there are no regulations whatsoever, in any securities act in any province in canada, that require brokers to disclose the FX rates which they are, in fact, charging their clients every single day, upon several classes of US dollar-denominated dividends.

i've been carrying out research in this area for several months now. Investors for the most part do not realize this, but in fact there are no regulations governing the foreign exchange fees that brokers are able to charge. Brokers can charge whatever they want. If brokers could get away with FX fees of 99%, i do believe they would charge this!

consider, if you please, the recent jump in FX fees at questrade, up to 1.99% from the average 1.50% being charged by the rest of the industry. How long will it be before all the other brokers jump to the 1.99% level, also? There is nothing whatsoever that is going to stop them.

nor are there any regulations that require stockbrokers to disclose their FX fees to clients. Yes, they do make certain attempts. There are FX conversion tools on brokers' websites. Clients can phone to learn the spread of the moment.

however, FX fees being charged on various streams of dividends are a virgin issue that brokers are not even beginning to deal with.

coming soon, in the next instalment from your humble scribe: What the class action lawyers have to say about FX fees to indignant investors

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Eclectic12

· #72 · Aug 22, 2013

humble_pie said:
eclectic the monthly statements from brokers are *not* going to be changed ...

Probably correct for quite a while ... time will tell if the *not* is going to hold forever. :biggrin:

Cheers

james4beach

· #73 · Feb 19, 2017 (Edited)

humble_pie said:
however, FX fees being charged on various streams of dividends are a virgin issue that brokers are not even beginning to deal with.

I'm seeing quite good foreign exchange rates applied to my USD dividends received in iTrade. FXA paid a 0.06128 US distribution on February 1. Google shows USDCAD on that day was 1.305 so on my 260 shares I'd expect to receive 260 x 0.06128 x 1.305 = 20.79 CAD

iTrade paid me 20.86 so there appears to be zero commission on the conversion fee. I think this is because I pay $30 flat per quarter for US friendly, which causes FX fees to be eliminated. They definitely give me pure market rates on stock trades, but this example also shows I'm getting market rates on dividends.

For very large accounts this $30 flat fee for US friendly is well worth it.

humble_pie

· #74 · Feb 19, 2017

^^

$120 a year is worth it?

couldn't you just keep your stocks paying USD dividends in USD account, meanwhile paying zero annual fee?

.

james4beach

· #75 · Feb 19, 2017

I have iTrade's US friendly because I make occasional US trades in this CAD RRSP account, not because of the dividends. I can turn the feature on or off, so I might only pay a single $30 during the year for the quarter I need it and then never pay it again.

But yeah, for USD dividends, using a USD account seems like the best way to go. I can't see $30/quarter being worth it just for dividends when you could open a separate USD RRSP.

humble_pie

· #76 · Feb 19, 2017

james4beach said:
I have iTrade's US friendly because I make occasional US trades in this CAD RRSP account, not because of the dividends. I can turn the feature on or off, so I might only pay a single $30 during the year for the quarter I need it and then never pay it again.

you didn't quite confirm directly but i get the impression you can buy or sell a US stock in this account, pay for it in CAD or take delivery of proceeds in CAD & your prices will be converted at spot rates. Plus being able to turn this feature on & off for only $30 a quarter is attractive.

as you know, cibc reportedly had something like that in their monocurrency RRSP until recently, when they went to a dual currency system. Previously, we were told, they were converting all CAD/USD transactions at spot. Reportedly they were not charging anything for that system.

i was thinking that such a feature is especially attractive in a RRIF account that holds a lot of US securities & also faces mandatory withdrawals.

it's better for an investor client when USD deposits & withdrawals in registered accounts can be priced for the CRA in CAD at spot rates. It's not so good when they get priced at the broker's buy rate, with built-in FX fee.

in general, it's interesting to see the trend in registered account foreign exchange trading. Little by little, year by year, everything is trending better & better for investor clients. Different brokers are coming up with all kinds of different adaptive solutions. Sometimes these are halfway measures - such as charging $30 per quarter for the privilege of obtaining spot FX rates - but still a halfway measure is better than no measure at all, right?

.

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james4beach

· #77 · Feb 19, 2017

humble_pie said:
you didn't quite confirm directly but i get the impression you can buy or sell a US stock in this account, pay for it in CAD or take delivery of proceeds in CAD & your prices will be converted at spot rates. Plus being able to turn this feature on & off for only $30 a quarter is attractive.

That's right. It is a CAD account with CAD cash balances, and when I buy/sell a US security I see the amounts converted at spot rates. Note that even if you turn it on for just a day, you'll incur the full $30 fee.

Different brokers are coming up with all kinds of different adaptive solutions. Sometimes these are halfway measures - such as charging $30 per quarter for the privilege of obtaining spot FX rates - but still a halfway measure is better than no measure at all, right?

I agree, these are improvements. Think of what amazing capabilities we have access to these days through discount brokerages, vs dealing with brokers in the 1980s.

TomB19

· #78 · Feb 19, 2017

james4beach said:
Think of what amazing capabilities we have access to these days through discount brokerages, vs dealing with brokers in the 1980s.

Back in the 80s, you had to give your money to a broker, negotiate an arrangement whereby he would action your requests, and then have an argument with him each time you want to make a move. Basically, you paid them to get in your way.

gibor365

· #79 · Feb 19, 2017

as you know, cibc reportedly had something like that in their monocurrency RRSP until recently, when they went to a dual currency system. Previously, we were told, they were converting all CAD/USD transactions at spot. Reportedly they were not charging anything for that system.

That's true. We weren't charged anything. Now CIBC moved to true USD RRSP and they will be charging FX fee going forward. However,if ex-div date was before USD$ implementation, dividends still will be received/DRIPed at spot rate.
Now I have choice to move any time I want any stock to USD side and back to CAD side,for free with no limitation. I can even move to US side Canadian stocks that are traded OTC on US side. (did it with WIR.U)

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