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A friend living in Canada has HSBC InvestDirect Canada as her discount broker, which requires a minimum of $10,000 CAD in the InvestDirect account. She doesn't want $10,000 of cash to lie around therein, destitute of any interest, so a customer agent recommended High-interest savings accounts (HISA). Some more links: Globe and Mail Newspaper, Canadian Capitalist, highinterestsavings.ca 1, highinterestsavings.ca 2, Financial Post.

However, the agent warned that only the product with FundServ code NBC100 can be traded online. All the other funds (1.3% interest: BTB100 ; 1.25% interest : RBF3010, NBC100, ATL5000, MIP510, MIP710 ; 1.2% : IBN100) can only be traded by phone, but written confirmation still be provided. When my friend pressed for an explanation, the agent only answered that these funds have existed for a few years, but the existing InvDirect infrastructure hasn't developed to fit them. Should I be concerned? Is this normal? With present technology, why would InvDirect still lack online means? Are they trying to evade, hide, or stonewall something?

[3rd last para here ] ... Your brokerage likely won’t offer all of them, and it may not allow you to trade them easily online. (When I made a deposit in the RBC fund through Scotia McLeod Direct Investing, I had to place the order by phone and it took two days to settle.) ...

  • Other than the inconvenience of having to use the phone to trade, what are you concerned about? – DJClayworth Nov 13 '14 at 19:07
  • @DJClayworth I just find it suspect and dubious that these HISA can't be transacted online, given that NBC100 can, in view of modern technology? – Greek - Area 51 Proposal Nov 15 '14 at 4:53
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The HISA you mention that can be traded online (BTB100 and such) are trading online since they can be bought/sold via FundServ. Fundserv is basically a settlement system for transactions between brokers, their clients and product providers (in that case, the banks that issues the savings account or most of the time, mutual funds company). That also explain the two days settlement period.

That said, the issue with HSBC could either be a technological one or simply the fact that the HSBC HISA is not set on fundserve.

HISA are not a great source of revenues for brokers since they normally get a few decimal of a percent compared to large commission or trailer from mutual funds. It also divert funds from regular account (where they dont pay any interest) and doesnt allow the broker to lend the funds to other clients if they are invested in HISA.

That explain why some broker are only using their own financial institution HISA or limiting the trades on the phone.

In conclusion, as long as your friend did her due diligence (check for CDIC coverage and the limit) and buy them from an IIROC member broker, i would not see any problem either buying them over the phone or the Internet.

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