2019: Can I buy Canadian stocks on Charles Schwab? Does Schwab offer trading penny stocks, medical marijuana stocks (Aurora Cannabis, Canopy Growth, Cronos, Tilray) from Toronto Stock Exchange?

Can I Buy Canadian Stocks at Charles Schwab?

Many investors are looking for exposure to the Canadian equity markets as Canada positions itself as a leader in the global cannabis sector.

In October 2018 Canada formally legalized the adult use of medical marijuana, becoming the only country outside of Uruguay to fully legalize the product’s use. While some American companies have maneuvered themselves domestically to take advantage of the emerging opportunity, they are currently limited in their business operations by the strict federal marijuana laws of their home country.

If Canada remains the sole safe haven for cannabis related business, Canadian companies will have an unmatched advantage in establishing themselves as dominant players in the multi-billion dollar global marijuana markets. It’s only natural that American investors would want to find ways to expose themselves to the risks and the rewards offered by the growing opportunity.


Trading with Chuck

Charles Schwab’s investment and trading platform is not known for its features, customizability, or ease-of-use. The main selling point of the 47 year old company is its brick-and-mortar offices and face-to-face customer service. That being said, the company does offer two options for desktop trading platforms. TradeSource is essentially their web platform bottled into a self-contained application, not exactly suitable for active trading. And SmartEdge is a decent attempt at building a professional trading platform. It certainly has the look and feel of a well-thought out product, but it lacks some key trading features that more advanced users will quickly notice.


Buy Cronos on Charles Schwab


Charles Schwab’s $5 transaction fee is definitely cheaper compared to competitors like TD Ameritrade, who charge a $7 transaction fee for domestic equity trades. But it is expensive comparing tp $0 commission charged by Firstrade. For domestically traded cannabis stocks, like Tilray, investing through Schwab’s or Firstrade's web platform is simple and self-explanatory.


Investing in Canadian Stocks on Charles Schwab

Investing in cannabis related companies exclusively listed on the Toronto Stock Exchange (TSX) is a little more difficult.

The most serious limitation of Charles Schwab’s services, when it comes to global trading, is that orders directed to foreign exchanges must be placed over the phone. Schwab, unlike its competitors TD Ameritrade or Zackstrade, do not allow for electronic trading of stocks on foreign exchanges. And unlike alternate brokerage services like Interactive Brokers Trader Workstation, investors cannot subscribe to foreign data feeds. That means that in order to place an order on the TSX to buy shares of Canadian licensed cannabis producer, WeedMD, investors must contact the Schwab’s Global Services Team or visit their local financial advisor. Extra procedures like this, make active trading and investing in these volatile markets a bit more time consuming.

Fortunately, investors at Schwab and other brokers can buy Canadian stocks that are traded as ADR's. There is no difference for investor when buying ADR's versus buying stocks other than 2 to 10 extra cents charged on sale transactions. All popular Canadian cannabis stocks are available as ADR's at Charles Schwab: Aurora, Canopy Growth, and Cronos.


Buy Canopy Growth on Charles Schwab


Competitors

Ally Invest offers same or lower commissions than Schwab and the same selection of cannabis and Canadian stocks.


Remember The Risks

Before jumping in to invest in foreign listed companies, it is important to understand the lesser-known risks of those investments. Not only are investors exposed to risks in the price movement of the stock, but they are also exposed to the price fluctuations of the foreign company’s domestic currency. To buy stocks in a foreign market, investors first need to buy that country’s currency which leaves them exposed to political and monetary policy risks. For a large enough investment, it is advised to consider hedging those currency risks with either currency paired ETFs or futures contracts.

Another risk to investing is the tax treatments of capital gains and dividends in foreign markets. Some countries, like Italy, charge much higher tax rates for dividends and capital gains being paid to foreign investors and others charge none at all. The accounting of these transactions can get complicated very quick so it’s important to consult a tax specialist about the potential implications before executing on any investment strategy.




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