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Trading US stocks on TSX

10796 Views 5 Replies 4 Participants Last post by  Mockingbird
Extreme newb question here:

When buying or selling a US stock on TSX is the currency in Canadian or US dollars?

I have hopes for one answer, but expect the opposite is true. If US dollars then forced currency conversions in registered account add transaction costs.

Clearly I'm still figuring things out. I don't want to get hosed on fees.
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All stocks listed on TSX are traded in Canadian Dollars.
I don't actually believe the TSX lists any non-Canadian companies.

By getting 'hosed' on fees, this depends on what you consider 'hosed' - there are some accounts that ding you less than others, or not at all.

You are correct that many brokerages (especially discount ones) do not allow holding USD in registered accounts. I believe Questrade is one exception, so everytime you liquidate or purchase with cash within the account, you'll have FOREX charges. How I mitigate this to some extent is buying in non-registered accounts using my USD, then transferring the assets in-kind - this way, at least I can control and buy USD when I want.

For these accounts, you DO get dinged for all dividends - no way around that except by using the Questrade accounts.

One last option is the 'wash-trade'. I believe Scotiabank's iTrade system, and possibly TD Waterhouse allow you to do this if you call in, do a quick search for wash-trade.
There are some errors above.

Some stocks listed on the TSX do trade in US dollars. They often have a 'dot U' in their ticker to warn you. The newspaper listing also have a warning of some kind.

Your use of the term 'US stock' shows some confusion. That term is used to describe 'stocks that trade on US exchanges'. So a 'Cdn stock' would be one that trades on Cdn exchanges. So you would never say 'US stock on TSX'.

A number of companies are dual-listed. That means their shares trade on both US (in US dollars) and Cdn (in Loonies) exchanges.

When you buy a stock and specify the ticker as one from a US exchange, the deal will be done in US dollars. If you do the trade from within a Cdn dollar denominated broker's account, they will take the necessary Loonies, convert them to US dollars, charge you the conversion fee (1% to 2.5%), and use the US dollars to do the deal. That is what happens in RRSP accounts at all the brokers (except one).

For that reason owning US stocks within an RRSP is not optimal. Your transaction costs will badly impact your returns. Try to find a Cdn listed stock with the same exposure. Or keep your US purchases outside the RRSP in a US denominated account. You make only one FX transaction early in your life, and leave the cash in US dollars for the long-term.

The TSX has lots of non-Canadian companies. There are Chinese timber plantations, and US data providers, and African mines, etc. They may move their head office to Canada, or just create a sham Cdn presence, but their operations, and your FX exposure, is elsewhere.
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Extreme Newb back again....

Thanks for the informative responses.

When I wrote "US stocks" I really simply meant US companies. However, no matter. I've learned some new terminology now and have had my question answered by several people.

I think I'll be careful to stick to trades done in Canadian currency. I'll glad to have learned from you folks that much of the TSX is worked in Canadian.

I can justify some extra transactions costs on my small trades if I chalk it up to learning. ... but I'd rather do the learning before spending the $ :)
There are some errors above.

Some stocks listed on the TSX do trade in US dollars. They often have a 'dot U' in their ticker to warn you. The newspaper listing also have a warning of some kind.
Leslie, you are correct. Dual currency listing was introduced in 2004.
I believe all "dot U" companies are dual currency listed (traded in both CDN and USD).
Yun, as long as you don't chase after the stocks with extra "dot U" extension, you will be trading in CDN currency.

Also, I like to clarify following terms here.
"Dual-listing" involves two stocks (of one company) listed in different stock exchanges.
"Cross-listing" involves one company with one stock listed in multiple stock exchanges (thus, convertible into each other).
"Dual currency listing" means that stock is traded in one exchange, but traded in TWO different currencies.
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