For those who don’t know what a wash trade is, a wash trade allows you to convert a holding in USD into another holding in USD without having to switch to CAD first.
After reading Canadian Capitalist’s post about TD Waterhouse Lowering Their Commissions, I posted this comment on his blog:
I just sent an email to E*Trade asking them when they are going to start offering wash trades or the ability to hold US cash in an RRSP. Everyone who has an E*Trade or questrade account, please bug them about this. I hope hoping this move by TD will cause the others to become more competitive. I do not want to move from E*Trade as it is a pain but I will have to in a few years if they don’t react at all.
By the end of the day, E*Trade had gotten back to me (as they have before when inquiring about this). Here was their reply:
Thank you for choosing E*TRADE Canada.
We are always looking for ways to increase customer satisfaction and attract new business and we realize that Wash Trades are something that clients want. With that being said, there is no specific time frame of when this will be offered through E*TRADE.
We are aware of TD Waterhouse’s new commission rates and we strive to be competitive. I will however mention some of the other benefits that are exclusive to E*TRADE, such as our high interest Cash Optimizer Investment Account, free Research from 5 independent resources, and our no fee, no minimum RRSP accounts.
So they aren’t totally clueless and they aren’t totally ignoring me. But that fact that there is no timeframe is a bit annoying. If they have a half-decent team of developers you would think they would have some idea of when this could be implemented. Maybe it’s that management has not okayed any resources for it or something. Well maybe now they will.
Update: Today I got another email from E*Trade, this time from a different person. So maybe my email got forwarded up the chain of command. Here it is:
Thank you for choosing E*TRADE Canada.
We have a plan to set up a system so that you do not have pay FX for buying and selling US stocks in rrsp account. But
we do not have any expected time frame yet. Please feel free to call us anytime from 8am to 12pm 7days a week, if you need further assistance.
I hope they can do this. This will be even better than wash trades.
Pardon my ignorance, but what exactly is a “wash trade”?
Sorry, I added some information to the start of the post. I hope that helps clarify.
Dave, thank you for fighting for this on behalf of yourself and other ETrade Canada clients. I, too am interested in holding US$ cash in my RSP to avoid the conversion spreads. Holding cash in US$ would save the hassle of doing a wash trade, like you mention, and would make me a lot less nervous about the result matching the intention (no “Oops, that wash didn’t work. ‘Darn!’)
Any update on this?
No, not yet, but Questrade Inc. announced in Jan. 2008 that they will be allowing clients to hold US cash in their portfolios. E*Trade does allow you do wash trades, however.