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Friday, February 19, 2021
Sunday, October 7, 2018
How to journal ACB.FF to ACB.To
Have you ever heard of inter-listed stocks? Do you know what they mean?
"Let's assume Company XYZ is a Canadian public company that lists its shares on the Toronto Stock Exchange. Company XYZ could issue more shares and list them on the New York Stock Exchange. Then, people in both the U.S. and Canada can buy and sell Company XYZ stock. By interlisting, however, Company XYZ must comply with all of the legal and exchange requirements that apply to companies doing business in the United States." - Investinganswers.com
Anyways, when a company is inter-listed or dual listed you can switch back and forth whenever you want. Example, if I buy 100 shares of ACB.FF on Monday, I can call my brokerage and switch over to ACB.To on Wednesday. It takes 2 days for the stock to settle so you have to hold ACB.FF for minimum 2 days. You bought ACB.FF and once you convert, you will have ACB.TO. This is called journaling by the way. All you have to do is call your brokerage and and say " I would like journal my shares."
Some of the main reasons people do this, is to save money on conversion fees. Without making it too complicated, let me explain. Lets say you have $1,000 CAD and you want to buy ACB.FF. If you want to buy this stock you need to have USD for it. To convert your $1,000 CAD to USD you usually have to pay a conversion fee. A lot of the times you won't see the conversion fee because it is built into the conversion rate. You can avoid that extra exchange fee by simply buying $1,000 worth of ACB.TO, and than journal" your shares over to ACB.FF. You can also do this the other way around too.
Don't forget ACB.FF trades in OTC so you have to put in a limit order. Another thing to keep in mind is that if you purchase in a currency that you don't have is that a forced conversion might take place or you might be required to convert first.
Note: I would highly recommend to do further research on this subject so that you better understand the process. I simply wanted to write this article to make you aware of the journaling process. If you want more information, google: "norberts gambit".
What this means is that the company is the same. They are listed on 2 different exchanges, and under 2 different currencies. One of the main reason companies do this is to get exposure to different markets.
Anyways, when a company is inter-listed or dual listed you can switch back and forth whenever you want. Example, if I buy 100 shares of ACB.FF on Monday, I can call my brokerage and switch over to ACB.To on Wednesday. It takes 2 days for the stock to settle so you have to hold ACB.FF for minimum 2 days. You bought ACB.FF and once you convert, you will have ACB.TO. This is called journaling by the way. All you have to do is call your brokerage and and say " I would like journal my shares."
Some of the main reasons people do this, is to save money on conversion fees. Without making it too complicated, let me explain. Lets say you have $1,000 CAD and you want to buy ACB.FF. If you want to buy this stock you need to have USD for it. To convert your $1,000 CAD to USD you usually have to pay a conversion fee. A lot of the times you won't see the conversion fee because it is built into the conversion rate. You can avoid that extra exchange fee by simply buying $1,000 worth of ACB.TO, and than journal" your shares over to ACB.FF. You can also do this the other way around too.
Don't forget ACB.FF trades in OTC so you have to put in a limit order. Another thing to keep in mind is that if you purchase in a currency that you don't have is that a forced conversion might take place or you might be required to convert first.
Note: I would highly recommend to do further research on this subject so that you better understand the process. I simply wanted to write this article to make you aware of the journaling process. If you want more information, google: "norberts gambit".
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