Special Situation Investing

Saturday, April 21, 2007

Etrade Canada Venting

Well just looked at my latest transaction from Etrade Canada and man am I pissed. I usually trade in American dollars so I haven't really noticed this before but the company is charging very excessive rates on my trades. I bought stocks yesterday when the exchange ratio was in the 1.12-1.125 CAD per USD range. Great. Etrade, however, actually ended up using an exchange ratio of closer to 1.143 on my purchase. That amounts to a ~2% grab just on the exchange ratio! That is huge! Consider that you will also pay ~2% on the way out as well. It makes it completely impossible to own stocks for anything less than years. A cigar butt with a 30% gain isnt' even worth your time as after Etrade takes it's bite you only have 26%.

I think these fees are excessive, swept under the mats and frankly I'm looking for a new online broker. IF anyone knows of one that doesn't charge massive exchange rates, let me know.

24 Comments:

  • Questrade is better (upto 1.5% each way as far as I know), but even better is to open up a US$ account and use xetrade.com. Non-registered accounts only..

    By Anonymous Anonymous, at 1:36 PM  

  • You could try Interactive Brokers. I don't use them (I also use ETRADE), but they claim to have good FX rates.
    Link


    They are also going public in a Dutch Auction of 5% of their market cap in the near future. Most of their money is made in automated market making. I don't think it's a good value investment, but it might be a good get in wait 6 months for good earnings and get out investment. (i.e. greater fool investment)

    They are only selling a small portion of their market cap to the public at this point, so I think management/owners have a big incentive to sell it at a relatively low price hope it gets pushed up a lot and then sell a much larger % of their holdings.

    By Anonymous Bayard, at 12:23 PM  

  • This is probably obvious but a great many Canadian securities trade on the pink sheets in the US. I have shares in some small cap Canadian stocks (say ~500M market cap). Spreads are not always that good but perhaps it would be better than getting scalped on the exchange rates?

    By Anonymous Anonymous, at 7:40 PM  

  • I use TradeFreedom. They're in Quebec. The exchange rate is absolutely awesome.

    By Blogger Tweakie, at 1:38 AM  

  • Scottrade is solid, you can't go wrong with them.

    By Anonymous Anonymous, at 1:30 PM  

  • I agree with the Scottrade recommendation. I'm in St. Louis where they are based. Great company.

    On an unrelated note, you have my blog, The Peridot Capitalist, listed on your blog roll. I jut moved my site to its own domain (away from blogspot) at www.peridotcapitalist.com. Would you mind updated the link on your site? Thanks!

    By Blogger Chad Brand, at 2:52 PM  

  • Chad..

    Where's your link to this blog? I didn't find it on your site.

    By Anonymous Anonymous, at 7:56 PM  

  • I am equally frustrated and annoyed with Etrade Canada, but for an entirely different reason - sent a fairly sizeable wire transfer to our US funds account, using their instructions on how to do this and they have now refused to process the transfer, have apparently returned it, and we are still waiting - it has now been 15 days (9 business days). Has anyone found a way to escalate issues within the company? I can't seem to get past the very unresponsive and unhelpful Customer Service Dept.

    By Anonymous Anonymous, at 9:00 AM  

  • Instead of buying U.S. stocks in your CAd account and getting hit with an FX, why wouldn't u just trade U.S> stocks in your U.S. account???
    doesn't that only make sense

    By Anonymous Anonymous, at 10:36 AM  

  • I believe for wire transfers to etrade canada in U.S. are ok. They just deposit them as they receive them as long as it is from a bank account in your name and as long as you asked your bank to add a note for further credit to "john smith, acct 123456
    no name, no account how would anybody know where to put the money???

    have u tried to go back to your bank requesting to retrieve the cash back?

    By Anonymous Anonymous, at 10:40 AM  

  • i've been bitten by the same thing. pretty much every financial institution charges 200 bps on exchange rates. I usually do my US investing on margin, you can borrow against your Canadian equity. Then you transfer only your gains back. You save transferring back your entire position.

    By Anonymous Anonymous, at 6:36 PM  

  • I paid 2% on cash conversion at my bank. For small amounts the spread is going to be sizeable anywhere. Try making bigger trades and you'll get better fx spreads. The fx spreads are usually tiered.

    always be aware of the account names when you send funds. If you move funds from a bank account in your name to a brokerage account in another name (i.e. your spouse) that is considered money laundering. If its an RRSP make sure its a spousal RRSP account.

    By Anonymous Anonymous, at 5:27 PM  

  • Hi! I'm an editor for Seeking Alpha. Please contact me at your earliest convenience at acarmel@seekingalpha.com. Abby

    By Blogger Abby, at 1:11 AM  

  • What happened to this blog? Any replacement blog like this? Thanks.

    By Blogger Value_Catalyst, at 8:35 PM  

  • why dont you guys go through your local banks. Each bank has a local brokerge dept that offer services via some kind of order mangament.

    they may not be as fast but trust me etrade and other are so slow compared with industy trading platforms large banks have direct access. anyway it should be cheap and more flexible with fx rates.

    By Anonymous Anonymous, at 7:40 PM  

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    By Blogger kiramatali shah, at 11:22 PM  

  • I think Interactive Brokers would charge you a far better fee than from the broker you currently use for your trades.

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  • Interactive brokers is by far the best. The FX commission is essentially non-existent. However Interactive Brokers will charge you a minimum of 10 dollars every month whether you trade or not.

    I use questrade and this has been bothering me too. But I don't trade a lot (I buy high quality US companies and hold them) so I didn't care till now.

    By Anonymous Anonymous, at 7:20 AM  

  • Some great suggestion as far as stocks go.

    By Anonymous PENNY STOCK INVESTING, at 3:19 PM  

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