I have previously used the DLR / DLR.U pair to execute Norbert's gambit, but I have heard conflicting things about whether it's possible to similarly journal equity stocks that are interlisted on both US and Canadian exchanges. Take Shopify, Inc., for example, which trades under symbol 'SHOP' on each of the NYSE (USD) and TSX (CAD). If I held 1,000 shares of SHOP on the USD side of my acct and for whatever reason wanted 1,000 shares of SHOP on the CAD side instead, could a brokerage simply 'journal them over' so I didn't have to sell 1,000 x SHOP.U and buy 1,000 x SHOP.C (for which I'd incur both trading fees, and some slippage due to the spread)? If so, just what is the brokerage doing to effect that journaling? They can't just 'convert' the shares, since they're entirely different floats that trade independently on different exchanges, right? So are they...essentially just doing the 1,000 x Sell(SHOP.U) & 1,000 x Buy(SHOP.C) themselves and eating the transaction costs as a courtesy to the client?
This Norbert's gambit looks foolish to me. This operation will take time. You buy with settlement T+2, transfer, sell. You'll have the position for a few days. Who knows what will happen? I don't know where you trade FX but it really should not be more than 0.5%. Yes, you can "journal" the shares. The brokerage will withdraw the shares from one depository (DTCC) and deposit with the Canadian one (CDS iirc). If the brokerage has direct accounts in both depositories, it's a straightforward process. If brokerage doesn't have direct account and/or uses different custodians for DTCC and CDS then it will take more time. In practice the brokerage will probably charge you a fee for the transfer. The shares require conversion if it's an ADR traded in the US. This is not the case with SHOP.
Thanks for the reply. I guess I don't understand the DTCC/CDS "depository" distinction...inasmuch as SHOP.C and SHOP.U are shares of the same company, aren't they altogether different share pools? I suppose I don't understand how 1 share of SHOP.C that I bought on the Canadian exchange "becomes" 1 share of SHOP.U that I can then sell on the US exchange. (FYI, if you google Norbert's Gambit - it's an extremely popular mechanism for converting funds at close to 0% (minus trading fees). In fact, DLR/DLR.U was a pair that I believe was created explicitly as a way to do it. In practice, you only hold the position for 2 days, b/c they can journal it over before it settles...so yes, you're exposed to FX change for a couple days, but you avoid the bank's 0.5 - 1.5% FX bite, which is the killer. Also FWIW most Canadian banks don't charge a fee for this, other than the standard buy/sell fee.)
SHOP in Canada and SHOP in USA are the same pool of A class shares. Imagine that those shares are physical. You get a courrier, hand him your paper shares and send him from Canada to the US. You can then sell stocks in the US in USD. You need to ask your broker if they can move shares from Canadian depo to US depo (and if they charge anything for it). Have you factored in the bid-ask spread too? I don't know what size you want to convert but you should be able to find a place to convert 100k for closer to 0.2% than 0.5%.