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I'm trying to figure out if I'm getting a straight story from E*Trade. Based on a post on this board, I thought that I could buy foreign stocks through E*Trade at the regular $9.99 commission rate. But what I was told when I tried was that for $9.99 I could only buy OTC versions of the foreign stocks, offered by a market maker affiliated with E*Trade. The guy I spoke with seemed a little unsure of some of his facts, so I hoped that someone on this board might be able to provide additional info.

I wanted to buy two foreign stocks, one trading in Toronto, one in Paris. If you want to check them out yourself, they are the "Eveready Income Fund" (Yahoo quote EIS-UN.TO), and Pernod Ricard (RI.PA). I phoned E*Trade and was told that I had two choices. E*Trade offered an OTC option to buy the stocks in US dollars through a market maker. EISFF and PDRDF are the respective tickers. If I bought the stocks this way, I could buy them online and pay the usual $9.99 fee. Alternatively, if I wanted to buy them direct, I could be connected with a broker in Paris or Toronto who could place the order directly, but then I would have to pay a "Broker Assist Fee" estimated as $45, and also would have to deal with currency conversions.

The OTC offerings in both cases had bid/ask spreads that were much higher than those of the underlying exchange. eg. the bid/ask for the Pernod Ricard was about 0.1% of stock price on the exchange, and 0.75% on the OTC market maker quote. So on a complete cycle of buying and selling the stock, using say $10,000 as the principle amount, I would expect to lose the 0.65% difference in the bid/ask by using the OTC version, which is about $65. But I would save 2 * $45 broker assist fees or $90, and I would save any currency conversion spread between E*Trade buy and sell rates (I'm assuming E*Trade has a buy/sell spread on currency exchange, but I didn't confirm that). So I decided this time to go with the OTC option, but I'm not very happy about it since it is clearly more expensive than the $9.99 foreign trading that I had hoped for.

Has anyone found a better way to do this, either with E*Trade or another broker?
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No, that's pretty consistent. Actually, truth be told, that seems to be pretty good relative to other brokers. I don't think Ameritrade has the same option, for example. One thing you should do is make sure that you've done a price conversion on the underlying shares. If the OTC shares are trading at a premium (which they commonly do), that $45 is some of the cheapest money you'll ever spend.

Bill Mann
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BunkerBob,

I tried to buy Controladora Comercial Mexicana which is listed on the Mexican Exchange through Etrade. They told me since an OTC version (CDCUF) was available, that they wouldn't allow me to purchase the exchanges directly in Mexico. I wasn't presented with the same options you were.

GS
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That's an interesting question...

I have been an E Trade customer for years and never tried.

I am switching away from them and over to Wachovia .... "Wachovia" ? !!! .. Yup.

Guess they got tired of losing business to the discount houses.

I have 3 batches of accounts.

One is Loooong term, maid up mostly of what I have found to be top performing funds. In Roths, IRA's ..

One is Long term, those I expect to hold for at least 2-3 years, I'm buying them on Fundamentals and spec.

And the last one is the "how stupid can you be" trading account.

One and two rarely see trades each quarters. Number three can sit there or become a trading post depending on how many times I am forced to lock in spectacular gains ;) Sell pigs or shift cash for the latest shot.

$10.00 a trade sounds good until you hit 25-30 trades going in and out.

Wachovia offers a flat $250 per Q unlimited online trade platform that gives you all the E trade premium account Bells and whistles .. charts and do-dads ..... plus much superior Stock, Sector and Market research published on the site by their own analysts as well as conventional.

And, I E mail "MY" account rep when I feel I want do discuss what I want to do with "Stuff" and he drives up and meets me at the branch a quarter mile from my house, we spend an hour going over what I have been thinking, he nicely explains how stupid I am, but shows me the numbers to back it up, throws me some other ideas and I go home and think them over.

If I decide to hang myself anyway, he will also gladly hold the rope and kick out the chair after one final warning. :)

Ill ask him about the international markets.

Bears
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Thanks GS: actually the guy I spoke with said almost exactly the same thing at first, i.e. that I wouldn't be allowed to buy direct if an OTC version was available. But after I asked a couple of questions, he volunteered the $45 option. So maybe they have a standard policy, but also some wiggle room.

Regarding Bill's comment about pricing of the OTC vs. underlying: in both of the cases I looked at, the average of the bid/ask on the OTC seemed to track very closely to the average bid/ask on the underlying. So at least in these two cases the OTC offering seemed to be properly priced, albeit with the higher bid/ask spread.

Bob.
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Go Bears! ROTFL

Good tip about Wachovia... I'll check them out.

Bob.
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If I decide to hang myself anyway, he will also gladly hold the rope and kick out the chair after one final warning. :)

Thank you for that Bears. I needed a giggle today :).


Nate
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Oh ... one other "great?" feature.

You can suck money right out of your MM checking account and pour it down the latest "sure thing" hole in the time it takes to push a couple buttons.

No time wasted for on line transfers to brokerages .... You can be Stupid the moment the urge hits you.

No longer can you watch that one in a million stock spike and blame the transfer turnover time ... you own it and reap the reward !!

No longer can you watch those 50% of the "HOT PICKS" spike and dive 20% only to flat line leaving you holding the bag for the next 9 months until ........

Wait .... is transfer time all that bad? :)


Bears
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Thanx Bears
I feel a lot better about my high dollar phone call only broker.
His "Are you sure you want to do this", has saved my impulsive backside a few times.

drab
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Just spotted a new notice on the E*Trade site that is relevant to this discussion. Not many details yet, but it looks like it could be very useful. Here's their pitch:

"Coming Soon: Online Global Trading

Trade globally in local currencies: Canada, Hong Kong, Japan, France, Germany, & the UK.

New! Global Trading is coming to E*TRADE Securities.
Soon you'll be able to:

* Trade stocks in six global markets: Canada, France, Germany, Hong Kong, Japan, and the United Kingdom.
* Hedge U.S. dollar exposure with five global currencies.
* Add international diversification to your stock portfolio.
* Easily view and manage your Global Trading Account with your other account(s) at ETRADE.com.
* Get customer support from our specialized Global Trading desk."
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Darn it Bob! I thought I was going to be the one to spread the good news for fellow ETraders.
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I did check on the Wachovia international market trading.

No.

Said to much trouble with currency exchanges.


My own fear is buying stocks that have not gone through basic SEC listing requirements. Fine on larger companies, but the chance of an "Uncle Wan's Noodles" pump and dump in the Asian markets seems like a pirates dream.

Bears
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