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Brokerage investment savings accounts
May 7, 2023
9:20 am
Norman1
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The trailer fee ban means mutual fund companies are no longer allowed to pay order-execution-only dealers any trailer commission. The ban does not apply to deposit taking institutions. Banks, trust companies, credit unions, and mortgage corporations can continue to pay deposit brokerage commissions, including trailers, to the order-execution-only dealers for gathering deposits.

The brokerage ISA's are distributed through the FundServ mutual fund system. But, they are actually deposits and not mutual funds.

May 7, 2023
7:00 pm
Frieda
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"Order-Execution-Only Dealers"

qtrade's notice: https://help.qtrade.ca/hc/en-ca/articles/4879253623067-Mutual-Fund-Trailer-Fee-Ban-

Basically if you don't get advice, then they have to offer F series.

May 7, 2023
7:26 pm
AltaRed
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Frieda said

"Order-Execution-Only Dealers"

qtrade's notice: https://help.qtrade.ca/hc/en-ca/articles/4879253623067-Mutual-Fund-Trailer-Fee-Ban-

Basically if you don't get advice, then they have to offer F series.  

That is only for actual mutual funds, not ISAs which are deposit accounts... as Norman1 has already explained. ISAs are NOT mutual funds.

May 7, 2023
8:34 pm
Frieda
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AltaRed said

That is only for actual mutual funds, not ISAs which are deposit accounts... as Norman1 has already explained. ISAs are NOT mutual funds.  

Not to put words in your mouth, but are you saying qtrade didn't need to switch to F series ISA's, because they're not mutual funds? Or that I'm just not linking to the proper ban for ISA's?
I called in when I got the notice, but I don't really recollect the conversation. Other than my simplified take ("Basically if you don't get advice, then they have to offer F series." - I called in to qtrade about my HISA's. They had notified me that I had to sell out of the fee based version).

May 8, 2023
6:56 am
AltaRed
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That would only be qtrade's interpretation (which anecdotally I have heard once before). I take that as simply confusion on their part because ISAs are traded (bought and sold) using the mutual fund FUNDSERV system and they may think these are mutual funds. Perhaps not the best and brightest folks there?

Technically they are incorrect but that is to your benefit since Series F will provide you with slightly better yield over their series A counterparts anyway. Let them go on thinking that.......

May 8, 2023
9:58 am
Doug
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AltaRed said
Technically they are incorrect but that is to your benefit since Series F will provide you with slightly better yield over their series A counterparts anyway. Let them go on thinking that.......  

You're right, but I would quibble, or just add a bit to what you're saying, in that Scotiabank is allowing their Series F funds to be distributed through Qtrade, which they don't have to do. As far as I'm aware, besides Scotia iTRADE, only Qtrade and Desjardins Online Brokerage have access to Scotiabank Series F funds (unsure about NBDB and HSBC InvestDirect). Other brokerages may only be to access Scotiabank Series A funds, if at all. In other words, Scotiabank could eliminate distribution of Series F funds to other brokerages at any time, meaning existing holders would only be able to sell that series of funds, or they may even be converted automatically to Series A if Scotiabank stops selling to other discount brokerages.

May 8, 2023
11:24 am
AltaRed
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Scotiabank has no reason to stop selling F series ISAs though via other brokerage channels as there is no net loss or gain to them (they are indifferent). Their F series DYN6004 generates the same gross yield as A series DYN6000. It is only the customer that sees less yield for A series....by exactly the amount of the trailer fee paid to the brokerage.

May 8, 2023
11:52 am
Doug
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AltaRed said
Scotiabank has no reason to stop selling F series ISAs though via other brokerage channels as there is no net loss or gain to them (they are indifferent). Their F series DYN6004 generates the same gross yield as A series DYN6000. It is only the customer that sees less yield for A series....by exactly the amount of the trailer fee paid to the brokerage.  

That's all true, yes, but Scotiabank sees other brokerage firms cannibalizing Scotia iTRADE's business, through increased transfers out to specific institutions such as Qtrade or Desjardins Online Brokerage, they have incentive to restrict those institutions access to its Series F funds. It's the same reason why none of the other banks offer their Series F funds to discount brokerages. 🙂

Cheers,
Doug

May 8, 2023
11:59 am
AltaRed
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Maybe but I do not see either of those 2 examples being a threat to Scotia's business. I suspect Scotia would/will react if that becomes the case. For now, it is a cool way to attract deposits and generate a profit margin.

May 8, 2023
12:24 pm
Doug
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AltaRed said
... and generate a profit margin.  

Not much of a profit margin, if any.

That's true that the majority of Scotiabank's retail deposits are not sourced through discount brokerage firms, so the reason they're able to generate net interest income on their retail demand deposits is the effective average interest rate on retail demand deposits is much lower than 4.50%. That trend is unlikely to reverse, so no I agree I don't see Scotiabank stop selling all ISAs through any brokerage firm. But they likely offer premium deposit rates to attract investors' dollars, at Scotia iTRADE, for when investors decide to redeploy that capital into capital markets. If Scotiabank sees other brokerage firms, such as those mentioned, holding an increasing share of the Series F version of their ISAs, they may cut those firms off, as they don't want to sacrifice Scotia iTRADE's #1 market share position in the discount brokerage space.

Cheers,
Doug

May 8, 2023
12:31 pm
savemoresaveoften
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CIBC, National Bank, LB are taking deposits from various cash ETFs and pay a higher rate than 4.5% at the moment. So Scotia paying 4.5% is not excessive at this point. It will be interesting how quickly the rates come down once its clear the BoC next move is a cut. Market is pricing in first cut by the end of the year, which I believe market is wrong this time.

May 9, 2023
8:55 am
Norman1
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The cash ETF's are not always transparent about the terms of their deposits. The financial statements of one I looked at indicated that its "cash" deposits were not necessarily all on-demand deposits as one would expect.

If one is willing to give a month's notice, one can get 4.95% for a "cash" deposit from Canadian Western Bank's Flex Notice account.

May 10, 2023
7:56 pm
procavia
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I'm with NBDB and can confirm that they do not offer F series, only A series.

May 12, 2023
9:46 am
BSGJ
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TDB8152 US$ ISA up from 4.40% to 4.65%

May 12, 2023
10:04 pm
Greedy Guy
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BMT124, BMT129 & BMT134 USD HISAs: 4.75%

June 7, 2023
1:03 pm
canada888
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no change today? Canada just increases 0.25% today.

June 7, 2023
1:11 pm
Norman1
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Been stable since last update a month ago:

ISA Rate
BMO High Interest Savings Account (BMT104) CAD 4.35%
Scotiabank Investment Savings Account, Series A (DYN6000) CAD
Equitable High Interest Savings Account, Series A (EQB1000) CAD 4.20%
Home Trust High Interest Savings Account, Class A (HOM100)
Manulife Bank Investment Savings Account (MIP510) CAD
B2B Bank HIIA, Series A (BTB100) CAD 4.05%
NBI Altamira CashPerformer Account, Series A (NBC100) CAD
RBC Investment Savings Account, Series A (RBF2010) CAD
Renaissance High Interest Savings Account, Series A (ATL5000) CAD
TD Investment Savings Account, Series A (TDB8150) CAD

  

June 7, 2023
2:12 pm
Norman1
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canada888 said
no change today? Canada just increases 0.25% today.

Brokerage ISA rates are not tied to Bank of Canada rate, treasury bill rates, or the prime lending rates.

The issuers won't change the rates until the desired amount of money isn't flowing into them.

June 7, 2023
2:46 pm
fat_dog
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How about 1 year to maturity bank bond . do they change with the bank of Canada rate change ? or government of Canada treasury bills do they change with the bank of Canada announcement ?

What investment vehicle do change instantly with the bank announcement ?

and why not buy them instead of bank product that do not ?

June 7, 2023
3:06 pm
AltaRed
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New short term instruments like 30 day Tbills and Bankers Acceptances will start to reflect higher yields almost immediately. You can buy TBills from brokerages but usually with fairly high minimums, with commission costs that detract from net yield.

You are usually better off investing in a short term flow through vehicle like a money market mutual fund or Cash ETF to start to see a yield uplift over the next week or two.

As Norman1 said, ISA rates will not change until the issuing institution wants to keep the deposits coming. In recent months, the big 5 banks have usually increased their ISA rates within a week of every change in BoC rates, and at amounts reflecting most, if not all, of the BoC rate increase.

Added: There is no reason for HISA rates or 1-2 year GIC yields to increase unless the issuers need to do so to compete with market alternatives like the bond yield curve that will reflect the 25bp increase in some way (more inversion most likely).

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