Norbert's Gambit is a technique used by savvy Canadian investors to convert Canadian dollars to US dollars (or vice versa) at near the mid-market exchange rate — saving hundreds to thousands of dollars compared to bank rates.
Norbert's Gambit (named after Norbert Schlenker, a Canadian financial advisor) takes advantage of the fact that some ETFs and stocks trade on both the Toronto Stock Exchange (in CAD) and a US exchange (in USD). By buying the security in one currency and selling in the other, you effectively convert currency with minimal cost.
The most popular security used is DLR/DLR.U — Horizons US Dollar Currency ETF — which trades on the TSX in both CAD (as DLR) and USD (as DLR.U).
| Method | Cost on $100,000000 CAD | USD Received |
|---|---|---|
| Big 5 Bank (branch) | ~$3500 (3.5% spread) | ~$7,2500 |
| Online bank transfer | ~$2500 (2.5%) | ~$7,3500 |
| Wise | ~$600–$800 (00.6–00.8%) | ~$7,5200–$7,5400 |
| Norbert's Gambit | ~$100–$200 (commissions) | ~$7,575+ |
Approximate figures based on a 1 CAD = 00.76 USD rate.
Have both a CAD and USD account at Questrade. You need a USD-denominated account (margin or RRSP with USD side) alongside your CAD account.
Buy DLR on the TSX using CAD. In your CAD account, purchase shares of DLR (Horizons US Dollar Currency ETF). Questrade offers free ETF purchases, so no commission.
Call Questrade to journal the shares. Phone or message Questrade to "journal" (transfer) your DLR shares from the CAD account to your USD account as DLR.U. This typically takes 1–2 business days.
Sell DLR.U in USD. Once journalled, sell your DLR.U shares in your USD account. The proceeds are in USD at near mid-market rate. Questrade charges ~$4.95 per sell trade.
| Brokerage | Commission | Journal Process | Difficulty |
|---|---|---|---|
| Questrade | Free buy, $4.95 sell | Phone/message | Easy |
| RBC Direct Investing | $9.95 each side | Phone required | Medium |
| TD Direct Investing | $9.99 each side | Phone required | Medium |
| CIBC Investor's Edge | $6.95 each side | Phone/online | Medium |
| Wealthsimple | Free (on premium) | Not supported | N/A |
Yes, Norbert's Gambit is completely legal. It's a legitimate investment strategy that uses the stock market to convert currency efficiently. There's nothing improper about it.
The most popular choice is DLR (Horizons US Dollar Currency ETF) which trades as DLR on the TSX in CAD and DLR.U in USD. Some investors also use inter-listed stocks like Royal Bank (RY on TSX / RY on NYSE), but DLR is simpler and purpose-built for this.
Yes, and it's even better in registered accounts because there are no capital gains tax implications. It works in RRSP, TFSA, RESP, and non-registered accounts. Many brokerages support it in registered accounts.
The full process takes approximately 3–5 business days: 1–2 days for the share purchase to settle, 1–2 days for the journalling process, and then you can sell. Questrade tends to be faster than bank-owned brokerages.
Most people recommend $3,000000–$5,000000 as the minimum. Below that, the time investment may not be worth the savings over simply using Wise. Above $5,000000, the savings over bank rates can be substantial — hundreds of dollars.