Exchanging funds in registered and non registered accounts (2024)

• Since Questrade accounts support dual-currency investing in both Canadian and U.S. Dollars, from time to time, you may need to exchange currencies in your account.
• Depending on which account type you trade from, (non-registered Margin, or registered) you may or may not need to manually place requests to exchange your funds.
  

One of the most popular account types is the non-registered Margin account. This account offers many unique features that are not available in registered accounts, notably:

• Buying on margin (borrowing funds from Questrade to invest/trade)
• Short-selling (borrowing shares you don’t own to sell)

Because Margin accounts allow you to borrow funds to invest or trade, Questrade will not convert your currencies for you automatically. This allows you to have more flexibility with your account, and borrow or convert currencies as needed.

For example:

You hold $2,000 CAD in your margin account, and would like to buy some US stocks or ETFs, but currently your USD cash balance is $0.

If you place a trade for an investment that trades in USD, your currency is not converted for you. Instead, after your trade executes, your CAD cash remains untouched, and your USD cash balance will be negative.

In this scenario, unless you take action, you will continue to borrow USD cash (while maintaining your CAD cash as collateral) and will be charged interest after the trade has settled.

Additionally, if a negative cash balance is not held overnight (past 4pm ET after the trade has settled), you are not charged interest. This allows for more flexibility in margin accounts for traders who ‘close their positions’ before the end of the trading day, or if you exchange your cash before the trade settles.

Check out the section at the bottom for a step-by-step guide on placing a currency exchange request manually.

Similar to a margin account, a cash account is a non-registered account suitable for most investors, especially those who are new to investing. However, in a cash account, you cannot buy on a margin. In other words, you cannot borrow funds from Questrade to invest more.

Since you can’t borrow funds in a cash account, you can’t have a negative balance. Let’s look at how exchanging funds work in a cash account below.

For example:

You hold $5,000 CAD in your cash account, and decide to buy USD stock. (Your USD cash is $0 before the trade.) After your trade executes, your USD cash balance will be negative for the total cost of the trade plus commissions, and your CAD cash balance will initially remain unchanged.

Since you cannot borrow funds in a cash account, Questrade will automatically convert the required amount of CAD cash to cover your negative USD cash balance at the end of the trading day (~4pm ET).

The next morning, your USD cash balance will be brought back up to $0, and your CAD cash will be decreased by the amount needed for the conversion.

Please note: If you choose to sell your shares later on, the USD cash proceeds will not be converted to CAD automatically by default. This allows you to use your new USD cash for other USD trades without having to convert back and forth constantly.

Check out this article on currency settlementpreferences for more information.

Registered accounts like the TFSA, FHSA, or RRSP offer many special tax benefits that are not available in margin accounts. These benefits however, come with some rules that have been put in place by the CRA.

One of the key differences between registered and non-registered accounts is that with registered accounts, you cannot borrow funds to invest, and cannot hold negative balances indefinitely.

For example:

You hold $2,000 CAD in your TFSA account, and decide to buy some USD stock. (Your USD cash is $0 before the trade.)

After your trade executes, your USD cash balance will be negative for the total cost of the trade plus commissions, and your CAD cash balance will initially remain unchanged.

Since you cannot borrow funds in registered accounts (due to regulatory requirements), Questrade will automatically convert the required amount of CAD cash to cover your negative USD cash balance at the end of the trading day(~4pm ET).

The next morning, your USD cash balance will be brought back up to $0, and your CAD cash will be decreased by the amount needed for the conversion.

Placing a request online is easy, follow these steps to exchange the cash in your account between CAD and USD (or vice-versa).

5. Specify the amount of CAD or USD you’d like to either buy or sell, in the action field
   • If you’re exchanging CAD to USD, you can either choose a specific amount of CAD to sell, or USD to buy
   • If you’re exchanging USD to CAD, you can either choose a specific amount of USD to sell, or CAD to buy
6. Enter the dollar amount you’d like to exchange
7. Click the green Submit button when you’re ready

Congrats, you’ve finished placing your currency exchange request. You can view your Request history by clicking the tab at the top.