Foreign Exchange: The Norbert’s Gambit

Foreign ExchangeForeign exchange is practically inevitable as your portfolio grows. You may be able to avoid it but if you intend to diversify your portfolio, chances are you will have some foreign investments requiring you to deal with foreign exchange, also known as forex. While the banks will happily convert your Canadian and US currencies, they do it at a cost by taking a small percentage as part of the currency exchange process. Fear not, there is a way to exchange your fund at the near spot rate and it’s done using Norbert’s Gambit pioneered by Norbert Schlenker.

Norbert’s Gambit

The concept is pretty simple as it simply requires you to buy an inter-listed stock on one stock exchange and sell it on the other stock exchange. Many Canadian corporations are listed on both the Toronto Stock Exchange (TSE) and the New York Stock Exchance (NYSE) (and other US exchange where applicable) providing you with a large variety of companies to execute the process with. While the process can be described in one sentence, the execution requires a number of steps that you should be aware of.


  1. Buy a stock that is inter-listed. For example, you can use Royal Bank (RY), or many of the major financial and resource corporation on the TSE.
  2. Wait until it settles. That’s a few days at least depending on your broker.
  3. Journal your stock from the exchange you purchase it to the other. You can go both ways here. The journaling process should be supported by your broker but you should find out before you do so. Journaling may require you to call your discount broker to execute as well.
  4. Sell your stock on the exchange and voila, you have your funds in the new currency.


  • Obviously, you get to keep more money to yourself 🙂 and that’s what matters. Your foreign exchange cost amounts to your 2 transactions.


  • The execution can take some time. Since you are dealing with business days, the process will take over a week just waiting for the 2 transactions to settle. If you need to transfer the money to your bank account, you can add more time depending on the process with your discount broker. It took almost 2 weeks for me to get through the full process when I did it. Note that different discount brokers can offer different timing of execution. Make sure you contact them.
  • Since you are buying a stock, there is always a risk that the price will go down. It doesn’t take long for cents to cost you more than the foreign exchange cost the banks or your discount broker have.


I tried the Norbert’s Gambit last year and it took some time to get through the process. I wasn’t in a rush but the possible swing in stock prices were less than desirable since I wanted to cash out the money. If you plan on keeping your funds invested, it can certainly be an option, otherwise there are other alternatives to foreign exchange. Note that the banks are by far the worse in terms of exchange fees.

I read a recent article on Money Sense by Dan Bortolotti sharing what is possibly an easier way to execute the Norbert’s Gambit with ETFs.

Readers: Have you tried the Norbert’s Gambit?

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12 Responses to "Foreign Exchange: The Norbert’s Gambit"

    1. The Passive Income Earner · Edit


      My Pleasure. It’s definitely not something you do just to convert money for a trip but as you build a diversified portfolio, Canadians tend to add a fair bit of US investments and that can become useful.

    1. The Passive Income Earner · Edit


      I have another post coming on different options, hopefully you can find something that works. I am quite interested to look into the ETF option since it doesn’t seem to change exchange at all and the value may not fluctuate much.

  1. I’ve been using NG to buy US stocks in my RSP for a while. The process is even simpler in the TD Waterhouse registered accounts. Buy on Canadian exchange, sell on US exchange (or vise-versa). No journalling, no waiting for the trades to settle. It saves me at least 1 percentage point over using the broker’s exchange rate, but it’s probably only worth it if you’re converting larger amounts (more than $5k or so) and you have <$10 trades.

    1. The Passive Income Earner · Edit


      Thanks for sharing your experience. My experience was with ScotiaITrade. Looks like TD is much better for that. Anyone else has experience with other brokers?

  2. I did it recently at TDW. I traded TD. I’m not sure about CASH account, but for RRSP no need to wait until it settles.
    I bought TD.TO and 2 min later sold TD.N (not all as I wanted also to increase my TD holdings), as I have automatically US$ wash, proceeds went directly to US MM. You avoid thus ridiculous TDW FX rate
    Obviously you have to convert more than 1.5-2K because of the commission fees.
    Also, I’d advise to do gambit with liquid stock that you don’t care to hold (if price sudden jumps down between your trades)

  3. RBC Direct Investing also offers free Norbet’s gambit (not advertised though). I used it my in cash, RRSP and TFSA accounts to convert between US$ and CAD$. No need to wait for trade settlement, No need to call-in. Just buy one from exchange and sell in another.

  4. Just performed another NG this morning at TDW. Here’s the particulars:

    Bought 308 shares of RY.TO at $16,219.24 and sold 308 shares of RY on US exchange for $15904.93 US. Exchange rate at the time was 1.01656. So I received the equivalent of $16,168.01. Total cost was $51 of which $20 or so was commission and $9 spread on RY. And, exchange value was just approximate.

    If I would have just converted to US at TD, I would have received only $16,219.24 * (1/1.01656 – .015) = $15,711.74 US

    So a savings of $193 US by using NG.

    Love this!!!

      1. Here’s how I do it.

        Get into Webbroker and get ready to sell shares in $cdn but don’t execute it.

        Call TD waterhouse, tell them you are going to buy RY in the $cdn account and then you want them to sell right away RY in the $US account then journal over the shares to the US account to cover the short position. Make sure you get the webbroker rate on the TD end of the trade as you cannot make that trade in webbroker even though you technically own the shares.

        Alternatively, if you have a $US account that you can short with then you can perform the short yourself. You’ll have to call TD after that to have them journal over the shares.

        I then make my trade for in this instance 308 shares and then the guy at TD does the short of the shares in the US account right after. It took 2 minutes once I got on the phone. Time between trades was probably 30 seconds given that TD needs to confirm the order at their end to you verbally first.

        Journalling of shares will take place before the close of the trade in 3 days.

        I hope this helps.

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