Trading Canadian and other foreign securities is now more convenient through Scottrade.

What's New

Scottrade now allows online order entry for Canadian securities and has opened the door to new international investment opportunities for customers.

The new securities available are American Depositary Receipts (ADRs) and ordinary shares (ORDs) from more than 20 countries, including a significant number of Canadian companies. Some trade on the major U.S. exchanges, but as is customary for foreign securities, many trade over-the-counter or on the less-regulated pink sheets or grey market.

To learn more about ADRs and ORDs, visit the International Investing section of the Knowledge Center.

How You're Affected

• You can now trade most Canadian securities at the online commission of $7 per trade for stocks over $1.
• Your foreign investment options have expanded to include more than 20 countries on six continents.

There are a small number of Canadian securities that are not included in this transition. You can continue to trade these securities through your local branch at the broker-assisted rate of $27 per trade.

Advantages & Disadvantages

Investing in foreign securities has many of the same potential benefits and risks as investing in the United States. Specifically, when you're investing in ADRs and ORDs, you can expect the following:

Advantages

• Online order entry at $7 per trade for many stocks offered in the new system.
• All transactions are completed in U.S. dollars, including dividend distributions.
• For tax purposes, ADRs and ORDs are treated like domestic equities.

Disadvantages

• Stocks trading on pink sheets or grey markets (as many ADRs and ORDs do) can be highly illiquid.
• These markets have very little regulation, and companies are not required to abide by the same standards of practice as securities listed on the major exchanges.
• There may not be much information available about foreign companies, and even if you do find good data, it may be written in a language other than English.

Also, keep in mind that anytime you're dealing with currency conversion, it could work for you or against you, depending on how the U.S. dollar stands in the world economy at the time of your trade.

How to Learn More

Visit the International Investing section of the Knowledge Center. Here, you'll find more information about different types of foreign securities at Scottrade, how to trade them, and how to read the symbols.

Special Risk Factors of International Investing

Although you take risks when you invest in any stock or security, international investing has some special risks. These special risks include changes in currency exchange rates; political, economic and social events; potential for illiquid markets; less information; reliance on foreign legal remedies; and different market structures and operations.

There are different ways you can invest internationally: through mutual funds, exchange traded funds (ETF), American Depositary Receipts ("ADR" or "ADS"), U.S.-traded foreign stocks, or direct investments in foreign markets. Learn more about international investing from a brochure from the U.S. Securities & Exchange Commission ("SEC") entitled "International Investing Get the Facts" at http://www.sec.gov/pdf/ininvest.pdf.

For mutual funds, you can get the prospectus for a particular mutual fund directly from the mutual fund. For ETFs, you can get additional information for a particular ETF from the ETF or from the exchange where the ETF is traded. Although most foreign stocks trade in the U.S. markets as ADRs, some foreign stocks trade here in the same form as in their local market. There are different trading markets in the United States, and the information available about an ADR or foreign stock will depend on where it trades.

If the trading market is the New York Stock Exchange (NYSE), NYSE Amex, the NASDAQ Stock Market, regional exchange or OTC Bulletin Board (OTCBB) market, the foreign companies file annual reports with the SEC, as well as other information available in their home countries. Annual reports contain financial statements audited by independent accountants using U. S. audit standards. The financial statements either will be prepared using U.S. accounting principles or will show what the key results would have been under U.S. accounting principles. This makes it easier to compare a company's financial position to similar U.S. companies. The shares of hundreds of foreign companies trade in these markets, usually as ADRs. If the trading market for the ADR or U.S. traded foreign stock is the over-the-counter (or OTC not to be confused with the OTCBB) market, these companies generally have not registered with the SEC, and they publish information in a foreign language based solely on foreign requirements, including different accounting and auditing policies. The OTC market is much less liquid than other U.S. securities markets, so it may be difficult to execute trades at favorable prices. In addition, the executing broker-dealer to whom we send your order may execute your order on a net basis, which means that the executing broker-dealer may purchase the security for its own account in the foreign country in the foreign currency and then sell the security to execute your order at a higher price that includes the cost of currency conversion, fees, taxes, etc. Most foreign companies trading in the OTC market have not registered with the SEC. These companies may not let U.S. shareholders participate in offerings of new shares, such as rights offers to existing shareholders, because that would require SEC registration. If you want to buy or sell stock in a company on the foreign market directly, Scottrade may be able to process your order for you. Foreign markets often operate differently from U.S. trading markets. For example, there may be different periods for clearance and settlement of securities transactions. Some foreign markets may not report stock trades as quickly as U.S. markets. Rules providing for the safekeeping of shares held by custodian banks or depositories may not be as well developed in some foreign markets, with the risk that your shares may not be protected if the custodian has credit problems or fails. International investing can be more expensive than investing in U.S. companies, including transaction costs such as currency exchange, fees and taxes.