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Discussion Starter · #1 ·
i've discovered an astonishing thing. Another lacuna, or blind spot, in the brokerage community, if you will.

there are 3 principal dual currency brokers. Everybody knows who they are. RBC. BMO. Questrade. With the exception of Q-trade & possibly virtual brokers, *all* the other brokers offer nothing but monocurrency registered accounts in canadian dollars.

when clients from monocurrency brokers transfer their registered accounts to a dual currency broker - as many thousands of such clients have been doing - their cost base (same thing as book value) goes with the account. All these cost bases are in CAD, of course. Because the original monocurrency broker could not keep any records in any other currency than CAD, duh.

at BMO, they pick up & continue to record the CAD cost base for all transferred registered USD holdings, even though it is wrong. Even worse, they then call the CAD cost base from the previous broker the *USD* cost base, which it is not.

surprisingly, BMO doesn't seem to be aware that they are making a gigantic number of these data misinformation mistakes on every new registered account brought in to them from a monocurrency broker.

worse yet, when asked politely to please restore a simple holding to its true USD cost base, which a client with impeccable records is able to precisely give them even though the previous monocurrency broker could not, the BMO licensed representatives refuse. They say they must stick to what the previous broker told them (although so far i've only been able to get this issue to a lowish level of licensed rep.)

i have thought about this issue carefully, though. I don't believe there's any practical alternative to what BMO is doing. What's missing in their approach is that, as trustees, they should be informing the clients about the distortion that is inevitably occurring.

every client who ever transferred a USD registered holding from a monocurrency broker to a dual currency broker is no longer able to accurately track total portfolio gains/losses on any spreadsheet. He cannot accurately compute his registered account paper gains or losses.

the cost base/book value distortion is not likely to be more than 10%. In some cases it will be much less. But the fact that such distortion is not being mentioned to clients is what bothers me.

does anyone know if RBC or questrade are handling this issue better? that is, more transparently?
 

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Good to know there are issues to watch for.

However, I'm not following a couple of points.

The first is ...
... i have thought about this issue carefully, though.

I don't believe there's any practical alternative to what BMO is doing.
Wouldn't the alternative be to build into the transfer process an explaination of what's happening and then have a way to update the ACB based on the client feedback?

I don't believe the gov't has made the broker liable for the ACB so I'm not sure why updates would be an issue.


... every client who ever transferred a USD registered holding from a monocurrency broker to a dual currency broker is no longer able to accurately track total portfolio gains/losses on any spreadsheet. He cannot accurately compute his registered account paper gains or losses.
I can follow that the dual currency broker that is doing this and won't allow changes is going to have a bad ACB ... but if the client is already tracking ACB in a spreadsheet - they should still be able to accurately track it.

Or am I missing something?


Cheers
 

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does anyone know if RBC or questrade are handling this issue better? that is, more transparently?
Just transferred my mono-currency RRSP account from TD Waterhouse to dual-currency Questrade. I had two US positions, both were transferred with cost in USD, but the values are different in Mobile app and My Questrade. For example (all in USD):

Book Value in TD Waterhouse: 50 shares of Boeing for $123.17 + $9.99 commission
Cost in Questrade Mobile App: 50 @ 120.63 (it was the share price on the day of the transfer)
Cost in My Questrade: 50.00 @ $123.67 (have no clue how this one was calculated - probably converted from Book Value in CAD)

Since this is RRSP and I don't need to calculate ACB (but track all Book Values in the spreadsheet anyway), I thought it was funny - to have two different costs in two different places :) The second position is Money Market USD MF, once I sell it - finally will have USD cash (and won't have to calculate back in forth to see how much it is lol)
 

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Discussion Starter · #4 ·
Just transferred my mono-currency RRSP account from TD Waterhouse to dual-currency Questrade. I had two US positions, both were transferred with cost in USD ...

Since this is RRSP and I don't need to calculate ACB (but track all Book Values in the spreadsheet anyway) ...

no. If you will forgive me, you are making the same mistake that everybody else has made.

there was no way TD could have transmitted the true USD cost base in a registered account.
because they do *not* keep USD records in registered accounts.
they only keep CAD records.
duh.

check back to your old TD statements, you will probably find that Questrade has just picked up the original CAD base from TD & is calling it USD. Which, of course, is not quite accurate.

another way to handle the issue would be for the intaking dual currency broker - questrade in this case - to convert all incoming USD securities in registered accounts at the FX rate of the date of intake.

this is much less desirable imho. It will generate far more distortion than merely keeping the original CAD cost base amount while calling it USD cost base, which is what BMO is doing.

your 3rd paragraph is interesting because you say you are tracking "all book values in the spreadsheet."

my whole point was that book values for all these securities - namely, all USD securities transferred in all registered accounts from monocurrency to dual currency broker since the beginning of time - are going to be false & the spreadsheets incorporating such figures will be inaccurate. Also my point was that there is no real solution.

as i say, i prefer the BMO approach but will probably get after them about informing the clients better. Right now it seems their staff are flummoxed by the sudden appearance of this problem :peach:
 

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your 3rd paragraph is interesting because you say you are tracking "all book values in the spreadsheet."

my whole point was that book values for all these securities - namely, all USD securities transferred in all registered accounts from monocurrency to dual currency broker since the beginning of time - are going to be false & the spreadsheets incorporating such figures will be inaccurate. Also my point was that there is no real solution.
I have a spreadsheet with 3 tabs: asset allocation/rebalancing, market values, book values. I fill in book values when purchasing something, so don't really care how it got transferred as this info stays the same (the original cost :)) Since it's an RRSP account and i won't have to pay taxes on any gains, I seriously don't understand why it's such a big deal - when our accounts were transferred from TD Waterhouse Basic plan to the self-directed, all Book Values got updated with the current prices, so we lost the original ones. And it was all in one currency (CAD) and one brokerage! :)

I would understand your concern if it were a non-registered account, but I think most people either do their own "book-keeping" or really don't care that much how much exactly (to the penny) they paid :) I might be wrong of course, but I wouldn't be calling Questrade and asking them to fix even Mobile Vs. Web cost mismatch lol
 

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Discussion Starter · #6 ·
I ... don't really care how it got transferred as this info stays the same (the original cost :)

when our accounts were transferred from TD Waterhouse Basic plan to the self-directed, all Book Values got updated with the current prices, so we lost the original ones. And it was all in one currency (CAD) and one brokerage!

once again, the point is precisely that the info does *not* stay the same when USD securities in registered account at monocurrency brokers are transferred to registered account at dual currency broker.

it's meaningless to compare to a transfer from registered account to non-registered. Of course the broker is going to set the *new* cost base in non-registered as the market value on the day of the transfer. That is the date when the taxpayer in non-registered is deemed to have acquired the security. But this has nothing to do with the procedure for transferring between registered accounts.


I think most people either do their own "book-keeping" or really don't care that much how much exactly (to the penny) they paid

the deviation from reality can run up to 10, 15 or even 20% in some cases, depending on when the securities were bought & the exchange rate(s) in effect at the time(s) of purchase. Most people tracking their total portfolios do care about their total gains/losses. If they don't care, why would they bother working up a spreadsheet?

this forum consists mostly of people who care & who are knowledgeable enough to deal with the care.
 

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once again, the point is precisely that the info does *not* stay the same when USD securities in registered account at monocurrency brokers are transferred to registered account at dual currency broker.
I meant the info stays the same in my spreadsheet :) Anyways, I answered your question "does anyone know if RBC or Questrade are handling this issue better? that is, more transparently?" - that no, seems to be the same in Questrade - and didn't mean to get into the discussion about the implications since to me it doesn't matter that much :)
 

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I can't see you getting that much traction with the Broker, since this is a registered account and there is no downside to an ACB error by the Broker as it doesn't drive any tax calculations.
 

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... my whole point was that book values for all these securities - namely, all USD securities transferred in all registered accounts from monocurrency to dual currency broker since the beginning of time - are going to be false & the spreadsheets incorporating such figures will be inaccurate.
Spreadsheets driven off the inaccurate USD ACB will be wrong, as will those investors blindly trusting the broker ACB calculations.

Spreadsheets kept as an independent ACB calculation should reveal the drift/issue.


Cheers

Cheers
 
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