Just as an aside, I don’t consider Avigilon to be an OTC stock as Schwab buys it for me on the Toronto Exchange.
OTC, Bulletin Board, and Pink Sheet stocks tend to be tiny companies, just starting out, losing money, with questionable accounting. Avigilon is a major company, with $200 million in trailing revenue and profitable and with good accounting. Different animal!
Just an interesting aside: I tried to buy AIOCF with IB and they didn’t recognize the signal. (I found out today it is because they only offer DTC eligible stocks. A new term to deal with.)
So then I switched my order to AVO.TO. When I looked this AM, I find I am short $7600 Canadian dollars and my USD balance went up about the same amount so I started a chat with the broker. (That’s when I found out they don’t do DTC non-eligibles.)
The agent courteously walked me through my first fx transaction (which is still pending) and tells me I’ll have to do this when I sell.
This is an FYI post for anyone interested
Mykie
Mykie, when you do orders in a foreign currency with Interactive Brokers, you have two choices: you can either borrow the currency or you can buy it. If you want to buy it, the simplest thing to do is to setup your order to buy the foreign shares and then, before transmitting it, right-click on it and attach a FX order to buy the currency. Then when you transmit the order, IB executes them both together and will take care of buying the correct amount of currency for you to cover the stock purchase.
If you don’t buy the currency (or have some available that you bought previously), then you’ll end up borrowing it.
Mykie, when you do orders in a foreign currency with Interactive Brokers, you have two choices: you can either borrow the currency or you can buy it. If you want to buy it, the simplest thing to do is to setup your order to buy the foreign shares and then, before transmitting it, right-click on it and attach a FX order to buy the currency. Then when you transmit the order, IB executes them both together and will take care of buying the correct amount of currency for you to cover the stock purchase. If you don’t buy the currency (or have some available that you bought previously), then you’ll end up borrowing it.
Wow Neil, Interactive Brokers sure makes it complicated. Schwab makes all that invisible. You put in the order in US dollars, and you get a fill denominated in US dollars. They take care of the rest behind the scenes. I think it’s because Schwab is set up for the average person, so they make it simple, while IB is supposedly set up for professionals, so they give you a lot of complicated choices. For the few foreign stocks I end up buying, I guess I prefer it simple.
DTC is a system for electronic securities record keeping. It was founded to eliminate the need for stock certificates and bearer bonds, which can obviously be lost or stolen and can be an inefficient way to transfer security ownership. DTC holds your securities in the name of your brokerage and your broker keeps track of your positions. I’m not sure of the availability of DTC outside the U.S. but I wonder if the Toronto exchange uses a different clearing system? I don’t have an answer for that. On the U.S., they’re basically a monopoly. Hope this helps.
I’d never heard of this either, Saul. Here’s a simple explanation I found:
The Depository Trust Company (“DTC”) determines whether, or not, a stock can be cleared electronically.
In simple terms, if a stock is “DTC-eligible” it can be cleared electronically. Most major-exchange-traded stocks are DTC-eligible. Many penny stocks are non-DTC-eligible. There are a variety of reasons for this including missed regulatory filings, improper filings, SEC investigations, and more. Bottom line? If a stock becomes non-DTC eligible, it must be cleared manually. The cost of clearing a trade manually can be very high – sometimes resulting in a trade surcharge amounting to hundreds of dollars per trade.