Norbert’s Gambit – how to exchange Canadian to U.S. dollars – for less

Norbert’s Gambit – how to exchange Canadian to U.S. dollars – for less

A quick Google of “Norbert’s Gambit” might highlight a few results for how to exchange Canadian to U.S. dollars – for less.

And rightly so. 

This approach is named after Norbert Schlenker, of Libra Investment Management, who as best we know, first came up with a simple form of currency arbitrage decades ago where you leverage shares listed on both Canadian and U.S. stock exchanges to swap currencies, with little currency risk, while potentially saving money on big bank foreign exchange transactions.

Why gambit?  Avoid forex gouging!

If you like to hold U.S. assets inside your investment portfolio (like I do – see what I hold in terms of U.S. stocks here), be mindful that some discount brokerages might charge you a foreign exchange fee to exchange Canadian money to U.S. money to help you make that transaction.

If a small forex fee of say 1.5% fee doesn’t sound expensive, look at it this way:  that’s $150 in additional fees for every $10,000 transaction you make.  Over many years of investing, in order to have a good portion of your portfolio in U.S. stocks or U.S. ETFs, that’s ample change working against you.

Fight the fees

Unlike some other blogposts, I believe there are a couple of ways you can exercise the gambit.

Option 1 – Use Horizons DLR and DLR.U

One popular way touted by financial experts is to use Horizons US Dollar Currency ETF.  (This ETF is actually available in two versions:  DLR and DLR.U.)  While both trade on the TSX, DLR trades in Canadian dollars and DLR.U trades in U.S. dollars.

The Horizon’s gambit generally plays out like this:

  1. Get a quote for DLR; place an order for those units. The trade will settle in Canadian dollars.
  2. Call your discount brokerage’s customer service desk and ask them* to take your DLR units and “journal them” to the U.S. dollar side of your account, where they should show up as DLR.U.
  3. Place an order to sell all of your DLR.U units. The trade will settle in U.S. dollars.

You’ll pay a couple of commissions with this process, but you’ll save on the forex. 

*Also, some discount brokerages now offer a client feature so clients’ can journal over their own shares within the brokerage website (e.g., TD Direct Investing); there is no phone call to the customer service desk to make for this transaction.  That makes life even easier!

Option 2 – Use Canadian inter-listed stocks

You might already know from following my site, that U.S.-listed ETFs or stocks are tax efficient in your RRSP.   Even better, many broad market U.S. ETFs have even lower fees than many Canadian-listed ETFs that hold U.S. assets – so that’s win-win.

Here are some posts on that subject, including taxable investing and what assets should likely go where.

These are great, low-cost, broad market ETFs you can consider holding in your RRSP account for growth.

If you’re going to own U.S. ETFs or stocks, you need U.S. dollars. 

To get these U.S. dollars, you can use Canadian inter-listed stocks including stocks that pay dividends in CDN $$ or USD $$.  I’ve used both. 

How does this gambit process work?

  1. Get a quote for your Canadian inter-listed stock (e.g., Royal Bank (RY) or Brookfield Infrastructure Partners (BIP.UN)); place an order for those shares. The trade will settle in Canadian dollars.
  2. Call your discount brokerage’s customer service desk and ask them* (*if you don’t have this online client feature to journal them yourself!) to “journal them” to the U.S. dollar side of your account. (For example, BIP.UN would now show up as BIP.)
  3. Place an order to sell some or all of your shares, if you wish. The trade will settle in U.S. dollars.

What do you mean – “journal them”?

Journaling shares refers to exchanging equivalent, dual-listed shares from different exchanges. When an investment trades on two different exchanges (e.g., TSX and NYSE), you’re able to freely exchange shares from one exchange to another.

For example:

  • RY.TO trades on the Toronto Stock Exchange (TSX) in Canadian dollars
  • RY trades on the New York Stock Exchange (NYSE) in U.S. Dollars

Both ‘ticker’ symbols (short form of the company name) represent the same company, and asset, just in different currencies. There are many different dual-listed investments.

You can find a comprehensive list of those Canadian inter-listed stocks that pay out dividends in U.S. dollars here.   

There are hundreds of Canadian inter-listed stocks to use beyond my list above.

Why does this process work? 

Essentially because the price for the stock will be the same on both exchanges, in the relative currency.  Meaning, if the price of BIP or Royal Bank or another stock goes up in New York, it will go up on our TSX as well. 

Unfortunately the arbitrage process is not entirely free.  There are commissions to pay for buying and selling the inter-listed stock at your discount brokerage.

What have I done?  Have I used Norbert’s Gambit?

You bet.

I’ve used both Royal Bank (RY) and BIP.UN (CDN) < > BIP (USD) in the past and I will probably use either stock again in the future. I’ve only done this a couple times myself once with Royal Bank and the latter with Brookfield. 

In some cases, I’ve actually profited from the gambit because I was fortunate (luck only mind you) to perform my gambit when the BIP.UN was down in price only to see it rise a few days later (as BIP) when the transaction settled a few years ago.  I certainly wouldn’t bank on this happening though and I don’t assume it will happen to me again in the future.

Another word of caution:  this process is probably not really worth it until you have a few thousand bucks to invest (if not much more).  Otherwise, you’re going to incur many transaction fees many times over to get the job done. 

Other than waiting a few days, usually three business days including the initial transaction day for everything to settle, I’ve personally found this approach a great way to exchange Canadian to U.S. dollars in my investment portfolio – for less. 

Have you performed either process above?  Do you use any variation of this approach to exchange Canadian for U.S. dollars inside your portfolio?  Do tell and help others.

Further reading – check out other bloggers that have also performed this process including GenY Money with Questrade.


My name is Mark Seed - the founder, editor and owner of My Own Advisor. As my own DIY financial advisor, I'm looking to start semi-retirement soon, sooner than most. Find out how, what I did, and what you can learn to tailor your own financial independence path. Join the newsletter read by thousands each day, always FREE.

36 Responses to "Norbert’s Gambit – how to exchange Canadian to U.S. dollars – for less"

  1. Hi Mark, can I also use Norbert’s Gambit in my TSFA account. And would this be better to hold US stocks that do not have dividends?

    1. Hey Jacq,

      There is no reason you cannot Gambit inside your TFSA but….read on why most don’t….

      There is 15% withholding tax on the dividends you earn on U.S. securities inside the TFSA. More details on tax efficiency here:

      So, something to be mindful of.

      In terms of holding U.S. stocks that have no dividends, inside the TFSA for sure, good call for the reasons above 🙂

      Not tax advice, just sharing!

  2. Hello: I’m trying to understand if there is any TAXABLE CAPITAL GAIN, in a NON-registered account in this situation:

    Exchanging US dollars to Canadian dollars, using DLR for the Norbert’s Gambit. Both the Buy and Sell transaction are done within a minute of two of each other.

    How does one properly calculate whether a Capital Gain (if any) occurred? (I don’t want to have annoy CRA ;-).)

    Thanks in advance for any help.

    1. Ha. Same day gambit, non-registered account? I personally wouldn’t worry but I’m not CRA!

      Food for thought:
      My understanding is any foreign-currency gains or losses in excess of $200 is reportable to CRA as a capital gain or loss.

      CRA doesn’t care about USD $$ sitting in a U.S.-dollar account. They are about the arbitrage when you convert funds in a foreign currency into Canadian dollars or another foreign currency, or when you used the foreign currency to make a purchase or payment for a gain.

      Again, I’m not CRA and this is not advice, just the guidelines I know about and follow.

    1. The challenge is the RY dividends are normally paid in CDN so if you want them in USD, you might be charged forex fees by your brokerage to move the CDN $$ dividends into USD $$. Give them a call and ask if they provide Bank of Canada spot rates – without any foreign exchange fees. Some do, some don’t!


  3. Yes, my minimum withdrawals from the RIFF are in $CDN and the $US I transfer as additional funds directly into my US chequing account. And they withhold taxes in $CDN.
    From there I can pay my US credit cards. Works really well. This is something I was planning for some time so that we would always have $US and not have to worry about current exchange rates.

    1. I like it. I think I will eventually do the same thing.

      Get a USD $$ credit card as well.
      Once the money is coming from our RRIF or RRSP in USD then I can move it to a USD chequing account and not worry about forex.

      1. Similar process for me as DivInvestor using my RRSP USD$ withdrawals. Withholding taxes calculated in CDN and all of it done with a few clicks of mouse. No calls, no cost etc. Transfer to USD acct on CDN side, then to US acct as needed with borderless accts, all from same login. Very convenient.

          1. I think I’ve said to you before it might be overkill for us, but it sure is convenient. A small motivator for me before was building a US credit history, but I have since learned that isn’t true. Because its through a CDN bank that utilizes CDN credit history, and I have no US SIN, employment or address it doesn’t.

            I get it for you. At this point may well not be needed.

            1. Ya, will have some sort of borderless account. And a USD $$ credit card at some point. TD and other banks have a few. In a few years probably once we start heading south for 1-2 weeks per winter consistently.

              Will email you back 🙂

  4. Hello Mark,
    I have used the gambit before and it works well to save money. Usually to exchange $US to $CDN when that builds up. We receive dividends from US companies (RIFF) and use them for our online US purchases and gas across the border, as well as vacations.
    As far as accounts go that is quite a list. RRIF(2) TFSA(2) Trading (2) CDN Chequing, US Chequing, LOC. And we have both US & CDN credit cards. No fees but have to keep a minimum balance. That is actually a fee depending on what you could use that money for. But as I said before, we don’t keep an emergency fund as that is what to LOC is for. Never had to use it for an emergency.

    1. Interesting…since I don’t feel very comfortable using my LOC as an ATM, but that’s just me! I’m rather conservative for sure…

      On the subject of USD $: Do you withdraw from your RRIF and move the USD $ directly into a USD chequing or savings account? Curious.

      Thanks for your comment.

  5. Thanks for the explanation for 2 ways!

    I’ve done the first gambit using the DLR through Questrade and had them journal, took about 4 days from start to finish to get USD going so I could sell DLR.U and buy the ETF I wanted in my RRSP. Total cost for the 2 trades on the DLR & DLR.U? $5.35

  6. Good information to pass along for those not familiar with the process and utilizing USD investments or cash. It could be a valuable addition to their investing reportoire and transfer currency to save on FX spreads/fees.

    I’ve lost track a long time ago how many transactions and how many dollars I’ve gambited over the years- both ways. Always in my registered acct. so far. Certainly several hundred $K+ and a dozen+ times. A great way to save money and works like a charm especially being able to do it all myself at broker- no calls etc re journalling, and also with a known outcome. I’ve read BMO is another broker that operates efficiently like this. Have used DLR but my go to is RY. The higher the stock price generally the closer the spread is so a little more efficient. So yeah Ian, CP for sure.

    1. I’ve never done a taxable one, although I know that can be done assuming you have a taxable USD $$ account.

      I believe BMO InvestorLine, TDDI, Royal Bank (RBC Direct Investing), and Questrade are rather efficient now with this – which is great for investors.

      1. Great that more brokers are getting on board with making it easier. I think I have been doing n. gambits for close to 15 years now.

        I believe I have done a gambit in unregistered now that I think of it. Had a good sized ETF holding there and sold maybe 6-7 years ago, and now all CDN$. Must have gambited both ways. I wouldn’t have used the broker to exchange it. Can’t be bothered looking it up. lol

        At my broker USD $$ investments are listed separatly from Canadian investments but all under same acct. Nothing to set up re USD. Just buy in the currency/market of your choice. Display has choice of settlement currency or CDN $ for entire acct. Maybe the same where you invest.
        ie any and all of our accts can hold both US and CDN investments without anything to be done but buy/sell

        Yes the comment from J has to make you feel good. Well done.

        Good luck with it J.

        1. Fair – I just think that for a taxable account – your brokerage won’t automatically open both USD and CDN $ accounts without your full approval. CDN would be by default me thinks.

          Same – at my broker I have CDN and USD sub-accounts within the same TFSA or RRSP account. I also have CDN and USD sub-accounts for my LIRA.

          Geez, adding it all up the other day with a blogger there is just so much to manage:
          -multiple savings accounts with no-fee institution
          -x1 daily chequing account with no-free institution
          -x2 TFSAs
          -x2 RRSPs
          -x1 LIRA
          -x1 DC pension
          -x1 DB pension
          -x1 non-registered account
          -x1 emergency fund (savings account)

          And that’s not even our credit cards to manage…crazy!


          1. Tried looking it up but couldn’t go back far from enough to find (72 mths only). However looking at the menu it offers me transfer from any of my other USD investment accts and my USD savings acct to “joint investment – USD “. That is consistent with all other acct options. ie Seemingly no separate USD unregistered acct. to give approval for and set up. I think USD investments simply a subset of a CDN default unregistered acct. unless you wanted to open another acct.

            Doesn’t really matter right now but if I remember I’ll ask sometime when I call. It’s possible in the next several years I will have to explore this anyhow as registered is drawn down- almost all USD investments.

            Ha, yes a few accts. Of course we could make it easier and hire someone to “manage” it all for us. lol
            -multiple savings accounts with no-fee institution
            -x1 daily CDN chequing account
            -x1 daily CDN savings account
            -x1 daily USD savings account
            -x1 US domiciled bank mony mkt acct
            -x2 TFSAs
            -x2 RRSPs
            -x1 LIF
            -x1 DB pension (nothing to manage though)
            -x1 joint non-registered account
            – only 1 CDN cc, and 1 US cc

          2. Yes, it can get a bit crazy with so many financial accounts to manage. Which was part of the reason I closed my TD Direct Investing accounts. But I kept the small savings account (my very low CPP goes into it) and my HELOC at TD. Never know when I might want to use the HELOC again, I had used it to buy my rental property which I sold 2 years ago this week (thank goodness).
            I want to get things simpler in case something happens to me. But it sure is hard to have less.

            Savings account, chequing account, HELOC, regular line of credit (used like a chequing account to pay bills so no transactions costs and free paper cheques), high interest savings account, US dollar chequing account, RRSPs, RRIF (to make withdrawals without any fees), TFSAs, cash investment accounts, DC Pension account to manage, DB pension to come later (small); overseas pension (very small!); UK state pension to come (buying back service still); whew a lot to keep a handle on.
            Don’t think I can get rid of any of these….

            1. Yes, I’m embracing this as well…over time. I feel like I’ve aged 2 years this past year with job and move and other things going on – so I can very much relate to: “I want to get things simpler…”

              Given your list of accounts, I often wonder what the average Canadian or U.S. investor holds? 10 accounts? 12+ Other? Wild when you think about it.

          3. Sorry I meant transfer/drawdown in kind to unregistered or possibly tfsa, in order to preserve some geographical equity weightings. Homework needed here on best choice(s) I’m guessing in time you probably have same consideration.
            Yes, sounds you would also need a usd acct of some kind to transfer to and tied to usd credit card, unless you gambit all to cdn.

            Missed my heloc and credit line acts. above.

          4. Sounds like a reasonable consideration for free. I pay fee for mine on cdn side as package for all acts, visa, safe deposit etc.( no min balance) The us mm acct & visa are free with min balance 1K.

  7. TD webbroker now have securities transfer function where you can transfer stocks from a CAD account to a USD account by yourself thus there is no need to call the broker any more and make this even more easier.

    1. I closed out–transferred–my TD Direct investing account as I preferred using another one. But a couple of years ago I phoned them to journal over a stock position and the guy on the phone had no clue what I was talking about….finally figured it out though.
      So nice to know you can now do it without phoning, they have made a lot of improvements to there online services. When I transferred out, they still were not keeping track of your ACB.

      Mind you, when I was first setting up a TFSA account there, the nice young lady on the phone gave me $200 to put into my TFSA, ’cause she liked me! A bonus for talking to a human.

      1. Yes, my understanding with TDDI and a few other discount brokerages is there is a client feature on the brokerage interface to journal the shares yourself.

        Technology has some benefits 🙂

        Good to hear from you.

  8. I wonder if choosing a widely-held stock like Royal Bank might cause some tax trouble for investors who happen to hold Royal Bank in their regular holdings. Purchasing more RY would affect the adjusted cost base for the existing holdings and possibly result in an unwanted gain when sold a couple of days later.
    I recently carried out my first Norbert’s Gambit and avoided this cost base issue by selecting an inter-listed stock (CP) that I didn’t already own. And btw the transaction all worked great – just as described in your post.

    1. Certainly it could cause tax trouble for taxable accounts Ian. I didn’t get into those details inside the post but there are certainly capital gains considerations for taxable investing – so I did link to that post I wrote in this article for that reason.

      I would think many investors might gravitate to owning U.S. assets inside their RRSP and keep their non-registered account for either Canadian dividend stocks (Dividend Tax Credit) – no gambit to worry about – or U.S. stocks that pay no dividends at all to be tax efficient.

      Buying an inter-listed stock that you don’t yet own in a taxable account was something I never really thought of – an interesting variation to avoid ACB (Adjusted Cost Base) calculations – since you technically never really own the asset on the CDN side.

      Nice 🙂


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