For Canadian stocks, how are U.S. dollars converted to Canadian?
The conversion from U.S. to Canadian dollars is done by the Canadian market makers. Here is an example of how Canadian dollars are converted to U.S. dollars: please note U$ = U.S. dollars C$ = Canadian dollars Lets say stock AAA-V is quoted at: Bid = C$ 0.15 Ask = C$ 0.16 and the current nominal conversion rate (meaning neither buying or selling rates) is C$ 1.00 = U$ 0.8305 The Canadian market makers build a 10 point (.0010) spread into the conversion rate and require that it end in a 5 or 0. Therefore the conversion rate would be: Bid = .8300 Ask = .8310 In addition to the 10 point spread, the Canadian market makers charge approximately a 1 1/8 percent agency fee for conducting the transaction. This agency fee is capped at U$ 0.02 (2 cents US) cents per share for PennTrade customers. If you were going to sell AAA-V it would yield [(0.15) X (0.8300)] – [(0.15) X (0.8300) X (0.01125)] = U$ 0.123 (Converted Bid rounded down from .1231) If you were going to buy AAA-V it would cost [(0.16
