[Scoundreller]

> If $GOOG tanks 10% in a day, and a retail investor buys $GOOG at its old price in Europe, who is better off?

> For Joe Retail buying or selling that instrument, he just received a small improvement on the spread as a side effect of essentially duelling titans.

As a Canadian, I take advantage of this to do USD-CAD currency exchange. Most big Canadian companies trade in Toronto and New York, so I can buy in Toronto in CAD$ and sell in New York for US$ because some HFTs are keeping them exactly in sync. All I pay is two trading commissions and a 1-2cents / $100share in spread. So converting $30k would cost me $20 in commissions and ~$12 in spread, so about 0.1% in cost and that goes down for as much as I'm comfortable in doing per trade.

I probably lose a bit more in whatever distortion I've created, but $30k doesn't account for much in their hundreds of millions of $ in daily volume.

[boulos]

Presumably by “trade in New York” you mean there’s an ADR (so you’re still trading within your account, but for a separate security).

Edit: because otherwise you’d need to also wire transfer, right? (Not saying this isn’t rational, just asking).

Looks like all the major Canadian banks are a good option for this (https://seekingalpha.com/article/93201-11-top-canadian-divid...).

[Scoundreller]

Nope, not an ADR. These are cross-listed shares trading under the same CUSIP.

Lots of cross-listed Canadian banks, railways, resource companies and telecoms. Usually I use something high priced to minimize spreads and avoid earnings seasons.

[boulos]

Interesting! Thanks for clarifying!

Edit: And your brokerage doesn't force the settlement funds into your local currency at an exorbitant rate or anything? (I am deeply amused by your backdoor currency exchange)

[Scoundreller]

Not anymore. It’s fairly standard for Canadian brokerage accounts to have a US$ and CAD$ side.

You do have to 'journal' the holdings between them for my broker. This is now possible online, but used to require a phone call.

The big gotcha with this method (depending on your account and broker) is that you might need to wait for your 'buy' to settle (2 biz days I think?) before journalling, so you face some market risk).

The procedure is somewhat formalized: https://www.finiki.org/wiki/Norbert%27s_gambit

[wdb]

Yes, normally takes two days, and can see the reason why they want you to call them beside the client binding :)

[Scoundreller]

Depends on the broker. Some make it instantly possible. Also instant if you already have a cross-listed holding.

[amluto]

Wow, that’s a complicated way to get a reasonable price for forex. 1 to 2 cents per $100 is not actually a particularly great deal — what actually seems to be happening is that your banks are ripping you off for currency conversions but not for stock transactions.

[Scoundreller]

And the other methods of achieving < 1-2 cents/$100 are? For those moving < $10m in a month?

I'd argue at $10/trade, the bank/broker is also ripping off for stock transactions.

[HenryKissinger]

What online brokerage do you use?

[Scoundreller]

Just one of the big banks. I could probably get the commissions down a bit, but I trade so infrequently and like the idea of an office I could walk over to if I had to deal with something in-person.

Sometimes brokers have bribes to get you to switch to them, so I might play that game one-day. $400 or $500 would cover years of trades for me e.g. https://forums.redflagdeals.com/scotia-itrade-new-client-up-...

[shoo]

some online brokers will let you do these forex trades directly (e.g. ibkr)

[Scoundreller]

Oh they all do, but often the rates are terrible (e.g. 1.5% commissions). I know IB has forex rates around what I can accomplish with less complexity, but it can be hard to meet their minimums to avoid monthly fees (especially with Canada's 'tax-free savings accounts').

[wdb]

Yes, normally, these trades heavily depend the currency pair, and the client, quantity, etc. And least that was the case at the bank I worked in the past

[hogFeast]

Er, foreign exchange trades close to $7trn/day. Your $30k doesn't register.

[Scoundreller]

Whole point here is to avoid forex brokers that charge more money than this method.

If you choose a thinly traded cross-listed share, you could end up in trouble.