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Currency Conversions in Registered Plan Accounts

How You Can Avoid Currency Conversions
In Registered Plan Accounts

If you’re trading U.S.-dollar investments in any Registered Plan account, including a Tax-Free Savings Account (TFSA), we offer a convenient way to avoid foreign exchange conversions each time you buy or sell. For your RSP and TFSA, you can request the opening of a US$ component to your existing RSP or TFSA by simply calling 1-800-465-5463. For your RIF, RDSP or RESP you can simply take advantage of our free, automatic U.S. Dollar Money Market Sweep & Redemption Service.

With a one-time phone call, you can enroll in this service which will automatically:

  • Sweep the proceeds from the sale of U.S. securities in your RIF, RDSP or RESP account into the TD U.S. Money Market Fund (Symbol: TDB 166)
  • Redeem sufficient units of the TD U.S. Money Market Fund that you hold to settle the purchase of U.S. securities in your RIF, RDSP or RESP

Benefits of this free service include:

  • More Savings: Avoid currency conversion charges when buying and selling U.S. securities in your RIF, RDSP or RESP account
  • Enhanced Income: Yield on the TD U.S. Money Market Fund is generally greater than the interest rate paid on simple cash balances
  • Greater Flexibility: Select the RIF, RDSP or RESP for which you wish to enroll

Enroll now by calling 1-800-465-5463

Dividends, interest payments and corporate actions are not eligible.
You must enroll to take advantage of this service.

Here are some sample buy and sell transactions showing how the service reflects in an account.

Typical WebBroker Activity Page Entries for transactions utilizing the Sweep & Redemption Service:

CollapseExample 1 - Purchase Security on U.S. Exchange

Step 1 – Purchase of U.S. Security

Trade Date Sett Date Description Action Qty Price Comm Net Amount
15-Mar-2013 20-Mar-2013 FICTIONAL CORP CONV TO CAD @3.55 %US PRE WZ*1572 BUY 200 $102.55 -$9.99 -21,248.45

200 shares of Fictional Corp are purchased Mar 15th with a March 20th settlement date. To facilitate the purchase, the required amount of USD are purchased at a USD premium of 3.55% (1.0355). Total value of trade is USD $20519.99 and when converted to CDN$ at a 1.0355 exchange rate is $21248.45.

Step 2 – Redemption of TD US Money Market Fund to cover cost of purchase

Trade Date Sett Date Description Action Qty Price Comm Net Amount
20-Mar-2013 20-Mar-2013 TD US M/MKT U$-I /NL'FRAC WE ARE RELATED TO ISSUER AS OF MAR 19,2013 SELL -2,051.999 $10.00 $0.00 $21,248.45

To pay for the purchase TD Direct Investing automatically redeems TD US Money Market Fund on March 19th for settlement on March 20th to match the settlement of the Fictional Corp purchase. To avoid any foreign exchange spread cost to the purchaser of the Fictional Corp shares the exact same value of USD of the TD US Money Market Fund, $20519.99 is redeemed and the same exchange rate is applied to create the equivalent CDN$ amount of $21248.45.

Because this transaction is in a RIF, RDSP or RESP account, the Net Amount column is always expressed in CDN$. The net result of the transactions above is that there are no net Foreign Exchange Costs to the purchaser of the U.S. security.

ExpandExample 2- Sell Security on U.S. Exchange

ExpandExample 3- Purchases and Sales of Securities on a U.S. Exchange on the
     same day