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 TSE:RYNYSE: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.

Image courtesy of cooldesign /