Can I hold US currency in my RSP?
Yes. As of January 14, 2008, Questrade clients can opt to hold
U.S. dollars in their registered accounts.
Can I hold US currency in any registered plan ?RRSP, RESP, RIF, etc?
Yes. All Questrade registered accounts can hold U.S. currency.
What are the benefits of holding U.S. currency in an RSP?
The main benefit of being able to hold U.S. currency in an
RSP account is avoiding the forced currency conversion fee
attached to every trade of a USD security. Previously, RSP
accounts could only hold Canadian dollars. Any trade ?buy
or sell ?involving a U.S. security would therefore also
involve a conversion to or from CAD. Depending on the amount
of trading in the registered account, the savings to Questrade
clients could be considerable.
Do I have to call in advance to avoid currency conversions when I trade USD securities in my RSP?
Because our trade platforms are direct access, clients do not have
to call in special requests (such as "wash trades") for USD buy
or sell orders. This allows traders to react to market movement
as quickly as they would in any other Questrade account.
Will I be charged currency conversions if I buy US stocks and options in my RSP?
If you have sufficient USD funds in your registered account
to cover the trade, there will be no currency conversion.
Because Questrade does not permit trading on margin in
registered accounts, you must convert sufficient Canadian
funds to complete the trade. You will be charged currency
conversion only for the amount of Canadian funds you convert.
For example, if you have CAD $1000 and USD $1000 in your
RSP account and you put in a buy order for $1500 in a USD
security, you will incur currency conversion for the portion
of the trade not covered by your existing USD.
Will I be charged currency conversions if I sell US stocks and options in my RSP?
If you have set your account currency as USD, then the answer
is no ?there is no currency conversion fee. If your account
currency is set at CAD ?the default currency ?you will
incur conversion fees.
Note: there is a $5 commission applied to trades involving
buying or selling USD units in RSPs. This is the USD unit
commission, and it will only be charged once per day in
which you make a trade involving currency conversions. For
example, there is no charge if you don't make a currency
conversion-related trade; $5 if you make one such trade;
$5 if you make ten such trades.
What is your market rate?
Questrade's market rate is determined at the end of each trading day, and applied to that day's trading activity.
Can I deposit US currency into my registered account from another source?
Yes. You can deposit US currency into your registered
account from another Questrade account or through any
of our approved account funding mechanisms, such as
wiring funds or certified cheque. Please visit our
fund an account
page for more information.
How do I set up a registered account with USD?
All Questrade registered accounts can be set up with USD.
The default currency for our registered accounts is CAD.
To change the currency to USD, login to myQuestrade, our
client services portal, click on the my account tab, and
select RSP currency settlement from either the drop-down
menu or side menu. You will have an option of either CAD,
USD or currency of the trade.
How often can I change the settlement currency for registered account trades?
Questrade updates settlement currencies at the end of the
trading day. If you want the change to take effect the same
trading day, Questrade suggests updating your currency before
4:00 p.m. ET. If you want to have the change take effect
the next trading day, Questrade suggests updating your currency
after 8:00 p.m. ET.
Can I have different currencies assigned to individual securities? To individual accounts?
You may assign a different currency to each individual registered
account you have at Questrade. At the moment, however, you cannot
assign individual settlement currencies to each security within
the account. For instance, if you set your RRSP to settle in USD,
every trade in that account will automatically settle in USD. In
this example, the proceeds from a trade of a Canadian security
would be converted to U.S. funds and would be subject to a currency
conversion fee. Note that you can have cash holdings in both
currencies simultaneously.
How will I calculate the CAD value of my contributions for tax purposes?
When you deposit USD to your registered account, we will use the
closing rate of the day to calculate the CAD contributions.
What is a "wash trade"?
There are numerous definitions for a "wash trade" or sale - so be wary
when using this term. In Canada, the generic term comes from the forex world
and refers to a trade or sale in which there is neither a gain nor a loss.
For some RSP investors and brokerages, this has come to refer to avoiding
forced currency conversions when buying or selling U.S. securities in a
registered account. The regulatory definition of a wash trade is the illegal
buying and selling of shares in one company through different brokers in
order to give the illusion of increased activity. The IRS — the U.S. tax
agency — refers to a wash sale as the buying and selling of the same
security within a certain time frame. This can have serious tax implications
to active U.S. traders, and has nothing to do with currency conversion.
Is USD in an RSP available to all Questrade clients?
As long as you have an active registered account, you can opt to settle trades in USD.
What are the regulations on holding foreign currencies in RSPs?
Regulations allowing foreign currencies in RSPs are recent. In 2001,
the CRA (Canada Revenue Agency) amended tax laws to allow foreign currency
holdings. In June, 2005, the CRA removed the 30% foreign property cap in
registered savings plans. On April 1, 2006, the IDA (Investment Dealers
Association of Canada), the Canadian financial industry regulator,
classified currencies as allowable assets in RSPs. This opened the
door for Questrade's USD in RSP.
Why do banks and brokerages do forced currency conversions when trading U.S. securities in registered accounts?
The legal ability to hold currencies other than the Canadian dollar in
registered accounts only came into effect on April 1st, 2006. But that
was only one hurdle. The other is the technology available to maintain
books and records (clearing capability), which is used by the majority
of North American financial institutions, including Questrade, to clear
trades. The software was not designed to hold multiple currencies in
registered accounts. As a result, there is simply no way for the
software to encode U.S. currency, therefore preventing anything but
Canadian dollars from being entered as cash in the account.
That said, there has been little to no corporate will to solve this
problem. It would be a switch-over on a massive scale and it would
eliminate a major revenue stream for brokerages and banks.
Are forced currency conversions in registered accounts legal?
In April, 2006, the IDA removed the final hurdle to holding multiple currencies in
registered accounts and investors were technically permitted to hold U.S. dollars.
However the mechanism to do so was not rolled out, and forced currency conversions
remained standard procedure. The legality of forced currency conversion is being
challenged in two Canadian courts.
What are the foreign content rules?
Effective January 1, 2005, there are no foreign property limits in RRSPs or
RRIFs. The previous limit of 30% no longer applies. However, self-directed
investors must ensure investments qualify for a registered account. Visit
the government of Canada's site on
foreign content rules
and
qualified investments.
When will I be charged the USD $5 commission on USD trades in my RSP account?
USD units are purchased or sold once per day at close of trading. This commission is in addition to the regular stock commissions.
There are three basic scenarios:
- If you select the default currency settlement option of CAD, there will be no
USD units purchased or sold and thus you are not charged the USD $5 commission on USD trades. Please
note that you will be charged currency conversion fees on any USD trade.
- If you select the USD currency settlement option, you will be charged a USD $5
commission each day in which you make USD security trades. You will not pay currency conversion
fees on these trades since no conversion is required. If you trade a Canadian security, any proceeds
or cash required will be converted to (from) your USD funds and you will pay a conversion fee.
- If you select the trade currency settlement option (i.e. both USD and CAD),
you will be charged a $5 USD commission each day during which you make USD security trades.
Please note that you will pay conversion fees if you do not hold sufficient US dollars to buy
a U.S. security and Questrade needs to convert the Canadian dollars in your account in order to
settle USD transactions.
Similarly, if you do not hold sufficient Canadian dollars to buy Canadian securities on any one trading
day, you will pay a conversion fee to convert your US dollars to cover the net Canadian securities
purchase.
Do I automatically have USD settlement in my RSP account?
While every RSP account automatically includes the option to settle trades in USD, the
default settlement is CAD. Clients must opt in to settle in USD or in the trade currency
through myQuestrade.
How does Questrade's foreign currency spread in RSP work?
On December 1st, 2007, Questrade changed its currency conversion fees in RSPs to
apply only to the net buy or sell of all USD securities on the day. At the end of
each trade day, we calculate the cumulative buys and sells, and only apply currency
conversion fees to the net difference.
