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Attention investors who want to avoid foreign exchange fees in their DIY accounts

One of Canada’s better online brokers has filled a big hole in its product lineup.

Scotia iTrade has finally introduced U.S.-dollar registered accounts, joining almost every other play in the online brokerage business. This means that investors who sell U.S. stocks or receive U.S.-dollar dividends can now let the cash pile up in their registered accounts and avoid a costly forced conversion into Canadian dollars.

Foreign exchange is a big profit-generator for brokers, so having a U.S.-dollar registered account can be a money-saver for investors who have a lot of U.S. content in their portfolios. It has long been standard for brokers to offer a U.S.-dollar version of cash accounts, but U.S.-dollar registered accounts have only arrived gradually.

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The most gaping hole in any broker’s U.S.-dollar account lineup now is TD Direct Investing’s lack of a U.S.-dollar registered retirement income fund. TD has U.S.-dollar registered retirement savings plans and tax-free savings accounts, but for some reason has been stalled on RRIFs. The bank has estimated that U.S.-dollar RRIFs will arrive in the second half of 2018. This delay has been an annoyance for TD’s older clients who are managing their own investments.

On its website, iTrade says it now offers U.S.-dollar RRSPs and RRIFs, as well as tax-free savings accounts and locked-in retirement accounts. The benefits, according to iTrade, are that clients incur no currency conversion costs when buying U.S. securities in the U.S.-dollar side of their registered accounts, and that they can hold U.S.-dollar dividends. It’s also now possible for clients to hedge against currency fluctuations by holding U.S. dollars

U.S.-dollar registered education savings plan are not available at iTrade, but the firm says it offers what it calls a U.S.-Friendly RESP. The iTrade lineup used to include a U.S.-Friendly RRSP, where you paid $30 every quarter to be allowed to buy U.S. stocks and exchange-traded funds without the usual foreign exchange markup. This U.S.-Friendly RRSP has now been replaced by U.S.-dollar registered accounts, which will be a simpler, cheaper option for most clients.

In the latest Globe and Mail ranking of online brokers, iTrade posted the best score of any bank-owned broker and tied for second place with the independent firms Questrade and Interactive Brokers. The winner was Qtrade Investor, an independent firm that has long had U.S.-dollar registered accounts.

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