[GNC] Stock "split" exchanging shares of different currencies?
Jim DeLaHunt
list+gnucash at jdlh.com
Fri May 15 03:02:26 EDT 2020
Adrien:
> Does it accept you changing the Imbalance split accordingly?
No. When I change the account Imbalance-CAD to Trading:CURRENCY:USD in
that split, when I save the transaction, GnuCash changes the amount of
the Trading:CURRENCY:USD split to zero, and adds another Imbalance-CAD
of 800.
> (the two CURRENCY splits should be opposite dr/cr of each other)
My understanding is for each currency, the splits with that currency
should sum to zero. I suspect that for this stock-type transaction,
GnuCash is treating all the splits as being in the same currency, even
though they are not.
In my expected transaction, there are two pairs of matching splits, one
for USD & DLR.U, one for CAD & DLR. Each pair of splits affects the fund
account and the corresponding TRADING:FUND account, e.g. Buy Brokerage
CAD:ETF:DLR, sell Trading:FUND:DLR. No currency changes hands in this
transaction, so I don't see why there should be any Trading:CURRENCY
splits at all.
Best regards,
—Jim DeLaHunt, software engineer, Vancouver, Canada
On 2020-05-14 21:59, Adrien Monteleone wrote:
> I’m not familiar with GC for stocks and such trades, but just looking at the form of the debits/credits I would hazard the guess that:
>
> Imbalance-CAD 800.00
>
> should be:
>
> Trading:CURRENCY:USD 800.00
>
> instead.
>
> I’m basing this guess on how I see other Trading account related transactions balanced by GC.
>
> The fact it used Imbalance-CAD might indeed be a bug.
>
> Does it accept you changing the Imbalance split accordingly? (the two CURRENCY splits should be opposite dr/cr of each other)
>
> Regards,
> Adrien
>
>> On May 14, 2020 w20d135, at 10:16 PM, Jim DeLaHunt <list+gnucash at jdlh.com> wrote:
>>
>> I did a curious stock transaction, and I'm having trouble when I record this transaction in GnuCash 3.10.
>>
>> I bought some shares of a fund, DLR.U, which trades in US Dollar prices on the Toronto Stock Exchange. I exchanged those shares for an identical quantity of shares in that fund with a different name, DLR, which trades in Canadian Dollar prices on the Toronto Stock Exchange. The purpose was to exchange US dollars for Canadian dollars at lower cost, via the so-called Norbert's Gambit <https://wealthsavvy.ca/norberts-gambit-questrade/>.
>>
>> The basic idea of Norbert's Gambit is that if the same security trades in one market in one currency, and also in a second market in a second currency, then the ratio between the two prices will always be close to the market currency exchange rate. If the prices ever diverge, this becomes an arbitrage opportunity: buy shares on the first market in the first currency, sell the same quantity shares on the second market for the second currency, convert funds back to the first currency in the conventional foreign exchange market, and profit. The net number of shares at the end of the transaction is zero. The DLR/DLR.U fund was created to facilitate Norbert's Gambit, but the same technique is possible with any stock which is traded in multiple liquid markets in multiple currencies.
>>
>> I had no trouble recording my purchase of DLR.U, in US dollars, in the US Dollar-denominated brokerage account. I just followed the instructions in the GnuCash Guide, 9.5. <https://gnucash.org/viewdoc.phtml?rev=3&lang=C&doc=guide>/Buying Shares <https://gnucash.org/viewdoc.phtml?rev=3&lang=C&doc=guide>/.
>>
>> The problem was recording the moving of the DLR.U shares to DLR, in Canadian dollars, in a Canadian Dollar-denominated brokerage account. I started off by following the instructions for a stock split in the GnuCash Guide, 9.10.2. /Moderately Complex Stock Merger/ <https://gnucash.org/viewdoc.phtml?rev=3&lang=C&doc=guide>. I took the example of SBC shares turning into ATT shares plus cash, and changed it to have DLR.U shares exchange for an equal number of DLR shares.
>>
>> The transaction I entered was this (simplified a bit from my actual numbers):
>>
>> *Account* *Shares* *Price* *Buy* *Sell*
>> Brokerage CAD:ETF:DLR 200 14.00 2,800.00
>> Brokerage USD:ETF:DLR.U -200 10.00
>> 2,000.00
>>
>> That is, move out 200 shares of the US-dollar DLR.UR, at the share price at which I bought them, and bring in 200 shares of the Canadian-dollar DLR, at the share prices they were at when I bought the DLR.U. That's pretty much what the real-world journal transfer of shares in my brokerage account was like.
>>
>> I expected that GnuCash would add in TRADING:FUND splits to balance the quantity of DLR and DLR.U shares in the transaction. I expected to see:
>>
>> *Account* *Shares* *Price* *Buy* *Sell*
>> Brokerage CAD:ETF:DLR 200 14.00 2,800.00
>> Trading:FUND:DLR.U 200
>> 10.00
>> 2,000.00
>>
>> Brokerage USD:ETF:DLR.U -200 10.00
>> 2,000.00
>> Trading:FUND:DLR -200 14.00
>> 2,800.00
>>
>> What I got was that, plus a Trading:CURRENCY:CAD split that was not motivated by anything, and then an Imbalance-CAD split to balance the Trading:CURRENCY:CAD split:
>>
>> *Account* *Shares* *Price* *Buy* *Sell*
>> Brokerage CAD:ETF:DLR 200 14.00 2,800.00
>> Trading:FUND:DLR.U 200 10.00 2,000.00
>> Trading:CURRENCY:CAD
>>
>> 800.00
>> Brokerage USD:ETF:DLR.U -200 10.00
>> 2,000.00
>> Trading:FUND:DLR -200 14.00
>> 2,800
>> Imbalance-CAD
>>
>>
>> 800
>>
>> I will observe that the Trading:CURRENCY:CAD split amount is exactly the difference between the ETF:DLR amount and the FUND:DLR.U amount, if you disregard that one is in CAD and the other is in USD. It makes me suspicious that GnuCash doesn't know how to handle a multi-currency stock swap transaction.
>>
>> Should there be a way to record this transaction correctly in GnuCash? If so, what do I do?
>>
>> Or, is this a limitation in GnuCash? If so, I should file a bug about it.
>>
>> I am running GnuCash 3.10 on macOS 10.16.5. I have trading accounts enabled.
>>
>> I have not found anything about Norbert's Gambit or this kind of multi-currency stock transaction in the documentation, the mailing list archives, the bug database, or the wiki.
>>
>> Best regards,
>> —Jim DeLaHunt, software engineer, Vancouver, Canada
>
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