US citizen buying CDN stocks

Discussion in 'Trading' started by cgtrader, Feb 18, 2007.

  1. Can someone with a more knowledge than me explain the rules about a US citizen buying Canadian TSX or TSX-V listed stocks?

    Through a US broker?

    Through a CDN broker?

    From my recollection a US citizen may not directly purchase CDN listed stocks?
     
  2. dpt

    dpt

    So far as I know there's no particular legal impediment to a US citizen buying
    and selling Canadian stocks on TSE and TSX Venture directly through a US
    broker. There's more than one that does it.

    Some Canadian stocks also are listed on NYSE.

    I think a US citizen is legally free to ask any US broker to buy whatever
    foreign stock he wants to buy, but he may of course get hit with significant
    excess transaction costs depending on how the trades are executed. You want to
    find out these things up front ...

    Buying options on foreign securities is another question, I don't think it's
    possible in general through a US broker. US citizens can't trade options on US
    equities outside the US due to SEC restrictions. Non-US futures and options on
    futures have to be approved by the CFTC.

    There is potentially exchange rate risk, but for CAD/USD, this has been going
    the right way for US investors the past couple years. The Canadian stock market
    has been doing well, too. You also want to take account of the fact that
    financial reporting is done differently, and that SEC doesn't regulate the
    trading ...

    TSE symbols tradeable at IB are listed here:

    http://www.interactivebrokers.com/en/trading/products.php?pdt=STK&ib_entity=llc

    and TSXV:

    http://www.interactivebrokers.com/e...venture&showcategories=STK&ib_entity=llc#show

    Surprisingly, the harder thing for me, as a dual American/Canadian citizen
    residing in the US, was to set up an account with a major online Canadian
    stockbroker to trade Canadian stocks from the US. I think it's easier for a
    citizen of the US only. I found a smaller firm out in Calgary that said they
    would do it, but didn't like the feel of it ...
     
  3. Thanks for the links, good luck with your search.

    What was the name in Calgary?
     
  4. dpt

    dpt

    Sorry cgtrader, just saw this.

    It's been a few years since I talked with the Calgary firm. I tried, but I
    can't remember the name. The reason I was looking into it was that my father
    had inherited some money from his father when he died, some of which was left
    sitting in a Canadian bank account, earning pathetically low interest. We
    arranged with the help of a very nice lady at TD to roll it over into GIC's,
    we decided we didn't want to bring the money back to the US since the Canadian
    dollar was weak at the time and we were bullish. We turned out to be right,
    but we would have much rather bought Canadian banking stocks with the money :p

    It seemed to be very hard to arrange to do that at the time. It may be
    easier now: I don't know what the situation is with IB Canada with respect
    to non-resident Canadians opening accounts.

    Good luck to you as well.