Brokerage investment savings accounts | Page 4 | General comparisons | Discussion forum

Bill said
Agreed, those fees would apply to TD Money Market mutual funds, which some people confuse with the ISAs. The T&C for the ISAs make no reference to short-term redemption fees, far as I can see.  

That’s what I thought too. However that $45 warning pops up when my friend put in a sell order.
I will ask him to contact TDW to confirm.

I also have been perplexed about that warning on the TD ISA 8152 sales
I went so far as to call in once, and was told that they never charged on these.
Still bothers me every time I see it
I'm guessing that, somehow, these have been coded under mutual funds in their system, thus triggering the "warning" message
Misleading

The 30 day minimum hold 'without penalty' is meant to mitigate large cash inflows and outflows from a closed end fund and offset short term trading costs in the fund.

Every mutual fund invests according to its prospectus and if there is too much cash coming in, or cash going out, the manager simply cannot 'invest' fund cash effectively enough, never mind fund trading costs to buy/sell assets within the fund, to obtain a desired return on investment. Short term traders of mutual funds in effect 'cost' long term owners of mutual fund units and the redemption penalties are designed to both mitigate this behaviour and to help offset some of these costs to the benefit of long term holders of mutual fund units.

The ISAs are deposit accounts where the bank invests the proceeds in very short term cash, or cash equivalents that likely have no (minimal) costs to buy/sell on short notice, and/or are pooled in a very large pool of other cash investments the bank has already. IOW, they are bank savings accounts, not closed end mutual funds. There is no more reason to have a 30 day hold (without penalty) on ISAs than there is a reason to have a minimum hold period on ordinary bank savings accounts.

Added: For in-house ISAs, the entire product process/cycle is under full control of the corporate entity so there is no reason to have hold periods, commissions to buy/sell, etc. One could argue that there should be no Series A sales (with trailing commission) on in-house ISAs at all. One should be able to buy/sell TDB series Class F ISAs at TDDI without any cost to the customer at all (just like bank savings accounts).

It is a slightly different story for third party sales, e.g. someone buying a TDB series ISA at Questrade. In that case, there is a cost for Questrade to have a relationship with TD and the Series A trailer fee of 10-15bp would be appropriate compensation and a 30 day hold should be in place for Questrade to at least collect one trailer fee for the 30 day hold (trailer fees are paid on a monthly basis). Example: If someone bought (or could buy) $10k of TDB8150 at Questrade, the monthly trailer fee would be $10k@0.1% divided by 12 = 83.3 cents per month.

As for minimum purchases, it would stand to reason why the minimum purchase of TDB8150 at TDDI would be less than the minimum purchase of TDB8150 at Questrade. The administrative costs of dealing with third parties is higher than it is in-house so it makes sense there needs to be some higher minimum threshold for third party sales.

In my TDDI account I bought some TD8150, 8155 & 8152($US) yesterday, no early redemption fee, etc messages came up.

You're right, here's what pops up on sell order, standard warning re mutual fund sales (note the last line, I'm assuming HISA means these ISAs):

"Funds held for less than 30 days are subject to a TDW short-term redemption fee of 1% or $45, whichever is greater. The Fund Issuer may also have a short-term redemption fee of up to 3%, see Fund Facts. These fees are not charged on Money Market or HISA."

Bill said
Thanks, Doug, but I have no idea what your response means. For example, if I buy a non-registered GIC directly from CIBC I think your answer suggests it would be in nominee name too - ? I'm pretty sure it's not, just me and CIBC involved.

My question was really about how I could determine whether it's in nominee or my own name.

And if the scenario is slightly different, i.e. CIBC GIC purchased directly from CIBC but held in my Investor's Edge (CIBC related entity) account. I'm guessing nominee, due to being held in broker account, but I'm wondering how I could verify that, by other than calling them. When I access my account or view my statements and view my holdings is there any way to tell whether it's in nominee name or not? As Norman1 has indicated this has implications re CDIC coverage, not that I expect CIBC to go under.  

That's all behind the scenes, Bill. Your brokerage firm issues your statements. It just means that The Canadian Depository for Securities, Limited / FundSERV, Inc. is the legal entity that has their legal name on your deposits, but they don't hold the deposits and have no claim to them. They're just the clearing and settlement agent who in turn knows which securities brokerage firm / member firm, as applicable, beneficially holds your deposits. That exchange of your information occurs between them and your brokerage firm and the deposit issuer, such that at the end of the day, the deposit issuer knows who is the final beneficiary of the deposits after sorting through clearing / settlement agent firm, brokerage firm, and registered plan trustee/custodian (if applicable).

If your GIC has a FundSERV code assigned to it, it's definitely nominee name. If it doesn't, it quite likely is as well, but it's possible your brokerage firm may have a more direct relationship with CIBC that allows them to hold CIBC GICs directly in trust for you. (Yes, I realize that sounds weird saying "directly in trust for you".)

What complications in terms of CDIC coverage did Norman1 say there is, though? I haven't read through the entire threads. It shouldn't, so long as you ensure you:
- 1. Do not exceed your CDIC insurance limit per deposit issuer (as identified by FundSERV fund code; each issuer will have a different fund code) within that same brokerage account; and,
- 2. Ensure you follow the same practice of #1 for each of your brokerage accounts, non-registered and registered, individual and joint.

If you own CIBC deposits directly in your CIBC bank account/GICs, that's a separate deposit limit and should not be combined with the in trust deposits held in nominee name through a brokerage firm or deposit broker.

Hope that helps,
Doug

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