| Accounts for all your needs |
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With our numerous types of non-registered accounts, you can hold a range of investment instruments and gain access to the Toronto and Montréal stock markets, the NYSE (New York) and the NASDAQ as well as Canadian and U.S. over-the-counter markets.
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| Cash account |
With a cash account, you can manage all your non-registered investments efficiently: your guaranteed investment certificates, fixed-income securities, mutual funds, money market instruments, stocks, and other investments.
At the time you make your first transaction, you are required to deposit in your account an amount that will cover the entire transaction. You can do this in two ways: either call one of our Customer Contact Centre representatives, or go to our website.
For all subsequent transactions, the transaction amount cannot exceed the total equity (net value) of the account, which takes into consideration the debits and credits in the account. If the purchase value is greater than the account equity, the transaction is rejected.
When you purchase securities, you are required to pay for them, at the latest, on their settlement date.
You must therefore ensure that your brokerage account contains sufficient funds on the settlement date, i.e., the last day you can settle the transaction. The settlement period varies according to the type of product, as shown in the table below.
| Product |
Settlement |
| Money market instruments (Treasury bills) |
Same day |
| Canadian and american options |
1 business day |
| Bonds issued and guaranteed by the Government of Canada and maturing within 3 years |
2 business days |
| Bonds issued and guaranteed by the Government of Canada and maturing in 3 years and over |
3 business days |
| Strip coupons - maturing within 18 months |
2 business days |
| Strip coupons - maturing in 18 months and over |
3 business days |
| All other securities |
3 business days |
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National Bank Direct Brokerage is committed to settling the proceeds of disposition of the securities within the same time limit.
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| Margin account* |
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A margin account allows you to take out loans against securities already in your account, or borrow part of the purchase price for the securities you want to buy. The maximum loan, or maximum broker advance, varies according to the investment type and market value of the securities. You have to pay a certain amount of money, called the margin deposit, in partial settlement of the transaction. The sum of the margin deposit and the broker's advance equals the total cost of the trade. See an example.
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Example
You buy 1,000 shares at $10 each, for a total of $10,000.
Since these are Canadian shares that are eligible for reduced margin, National Bank Direct Brokerage can lend you 70% of the total amount, that is, $7,000; you only need to pay $3,000.
Assuming the stock price goes up to $14 and you sell your securities, you realize a gain of $4,000.
Since you only paid $3,000 for the investment, your realized growth is 133%, whereas with a $10,000 payment, your growth would have been limited to 40% over the initial investment.
Note: the leverage effect also applies to negative price fluctuations, which means that losses can be greater than if incurred within a cash account.
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| *Using borrowed money to finance the purchases of securities involves greater risk than purchases using cash resources only. If you borrow money to purchase securities, your responsibility to repay the loan and pay interest as required by its terms remains the same even if the value of the securities purchased declines. |
The maximum advance allowed by National Bank Direct Brokerage varies according to the purchased securities, as shown in the table below. |
| Security class |
Advance as a % of market value* |
| Canadian and U.S. stocks |
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| Value of $5 and more for securities that are eligible for a reduced margin** |
70% |
| Value of $2 and more |
50% |
| Value under $2 |
No advance |
| Fixed-income securities |
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| Corporate bonds |
50% |
| Corporate debentures |
50% |
| Municipal bonds |
95% |
| Provincial government bonds |
95% |
| Commercial paper |
90% |
| Government of Canada bonds |
96% |
| U.S. Government bonds |
96% |
| Canadian Treasury bills |
96% |
| Mutual funds |
50% |
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These rates apply to the initial trade. If the price of the margined security falls, the broker's loan is reduced and you'll be required to pay additional margin.
** High liquidity and low volatility are some of the criteria used to determine eligibility for reduced margins. |
| Overweighting |
Margin accounts must maintain a minimum amount of real available margin, which is different from the available margin displayed in your account. When your portfolio becomes overweighted, its risk increases and as a result the available margin must be reduced accordingly using the following calculation:
Real available margin = margin available - (margin of the largest marginable position multiplied by 30%)
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| Example: |
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Margin displayed in the account : $10 000
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Margin of the largest marginable position divided by two:
$5 000 in National Bank stocks, marginable at 70% results in a loan value of $3 500, divided by two equals $1 750.
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Real available margin: $10 000 - $1 750 = $8 250
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This amount represents the real available margin that can be used for transactions.
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| Interest rate on account balances |
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Visit the Commissions and Fees section to view the applicable fees on CDN$ and US$ margin accounts.
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| Debit balance |
Margin account |
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CDN$ |
US$ |
| $0 - $9,999.99 |
P + 1.25% |
P + 1.25% |
| $10,000 - $99,999.99 |
P + 1% |
P + 1% |
| $100,000 and over |
P |
P |
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| *Interest on regular and registered accounts will only be credited or debited if it reaches $5.00, however on margin accounts it will be credited or debited as of $0.01. P = National Bank of Canada's Prime Rate. |
| Details |
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National Bank Direct Brokerage reserves the right to approve or reject financing securities of a more speculative nature and/or reserves the right to change margin rates without prior notice.
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Securities of companies designated as development companies on the TSX Venture Exchange (TSX-V) which have not been listed and posted for trading for a minimum of 3 months, and securities of junior capital pool companies may not be carried on margin.
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Margin calls: if the price of the purchased securities drops below a certain level, your account will be subject to a margin call. You will then be required to immediately deposit money in the account or sell some of your positions. If the margin call is not handled immediately, National Bank Direct Brokerage can, at its discretion, sell securities to cover the balance owed.
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| Margin account with short selling* |
This type of account allows you to use our services to sell securities you do not hold yet, with the purpose of buying them back eventually at a lower price and realizing a capital gain. In certain circumstances, we may deem it necessary to require a higher margin. Please note that National Bank Direct Brokerage reserves the right to close short positions if borrowing such securities is no longer possible. See an example.
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Example
You want to short sell 1,000 shares of a stock that can be purchased through options at $10 each, as you expect the stock to drop in value. You will then need to provide a $3,000 margin as illustrated in the following calculations:
| 130% is the minimum credit balance required with stocks that are eligible for a reduced margin of $10 X 1,000 shares = |
13 000 $ |
| Less proceeds of the short sale ($10 X 1,000 shares) |
10 000 $ |
| Minimum required margin: |
3 000 $ |
Let's assume the share drops in value to $5.25. You may buy shares at the cost of $5,250 ($5.25 X 1,000 shares). The gain will then be equivalent to $4,750 ($10,000 - $5,250). Considering that you only paid $3,000 at the start, you're looking at a growth rate of 158.33%. If you had actually held the shares from the beginning, your gain over the proceeds of the sale ($10,000) would have amounted to just 48%.
Note: the leverage effect also applies to negative price fluctuations. Short selling is risky as it may lead to unlimited losses if the price of the security sold increases substantially. In reality, no one can predict the maximum price a share can reach.
| *Using borrowed money to finance the purchases of securities involves greater risk than purchases using cash resources only. If you borrow money to purchase securities, your responsibility to repay the loan and pay interest as required by its terms remains the same even if the value of the securities purchased declines. |
Features |
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This type of account is meant for investors who have the experience and financial means to maintain the credit line required for such trades.
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All the Details applicable in the case of Margin accounts are also applicable in the case of Short Sale accounts.
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Interest rate on account balances : Visit the Commissions and Fees section to view the applicable fees on CDN$ and US$ accounts.
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| Margin deposit |
| Minimum credit balances required by stock exchanges and the IDA |
| Security class |
Minimum margin required as a % of market value* |
| Securities of $5 or more that can are eligible for a reduced margin |
130% |
| Securities trading at $2 or more |
150% |
| Securities trading between $1.50 and $1.99 |
$3.00 per share |
| Securities trading between $0.25 and $1.49 |
200% |
| Securities trading under $0.25 |
100% plus $0.25 per share |
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*National Bank Direct Brokerage may require higher margins in some cases and reserve the right to close short positions if borrowing such securities is no longer possible.
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| COD account |
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With a COD account, payment transactions are settled by another financial institution or broker holding the securities in custody. Where a purchase is made, the other institution or broker sends a cheque and receives the certificate(s) for the securities. Where a sale is made, the other institution or broker sends us the certificate(s), and we forward the cheque on delivery.
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| Income account |
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Dividends and interest generated on your investments are deposited in a specific account at any branch of National Bank of Canada or another major banking institution.
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| Features |
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The income payment is made on the day that matches the account opening day. For instance, if the account was opened on a Thursday, the deposit or cheque is sent on the Thursday following the deposit of the dividend or interest in the account.
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The payment must be a minimum of CDN $15 (or US $15 in the case of a US$ account).
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Dividends and interest are paid:
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in a specific account via deposit (branches of National Bank of Canada or other Canadian financial institutions) |
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by cheque mailed to the client. |
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| SSP II account (Stock Savings Plan II) |
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The Stock Savings Plan II (SSP II) entitles individuals in Quebec to deduct from their taxable income investments with respect to common shares and investment fund securities (“Qualifying securities”) issued in the primary market from their taxable income.
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| Features |
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Any individual residing in Quebec on December 31 of the tax year can claim a deduction with respect to a stock savings plan. This fiscal measure applies to provincial tax only and deductions are limited to 10% of total income. |
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Until December 31, 2010 , investors are allowed to deduct 150% of the adjusted cost of the qualifying securities. Beginning on January 1, 2011, the investor can deduct 100% of the adjusted cost of qualifying securities. |
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The taxpayer must keep the qualifying securities in the plan for two complete calendar years following the year in which the securities were purchased (i.e., through December 31 over three consecutive years). |
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If the investor does not keep the shares for the minimum period required, i.e., through December 31 over three consecutive years, they must be replaced by qualifying securities in order to maintain the tax deduction. |
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A list of qualifying securities is published in a weekly bulletin available on the L’Autorité des marchés financiers (AMF) website, under Section 6.11, Annexe 4 (French only) (http://www.lautorite.qc.ca/bulletin.en.html). Qualifying securities include Quebec-based companies whose assets aggregate less than $200 million, capital pool companies and investment funds. |
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A covering transaction must be completed before the end of the second month after the sale or by December 31 of the year of the sale, whichever comes first. |
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