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It works w/o margin. I placed a test order (not entered, just reviewed) in my Schwab IRA (no margin with IRA accounts). I got a warning about potential freeriding:
1. Caution: This buy order was accepted without sufficient settled funds to trade in your account. If you subsequently sell this security without first delivering sufficient cash by settlement date, you may incur a trading restriction requiring settled cash up front for future purchases. (AC176)
With this change, I no longer have a strong need to move out of Schwab. Their order execution does not appear to be as good pricing as I seem to get at Fidelity but the trade ticket seems more user friendly than at Fidelity. For now, will continue with status quo.
@Derf, I got that warning from Fido only & ignored it, but never from Schwab or Vanguard. So, I am surprised by the VG warning.
The way I understand the issue is that the Treasury has until midnight on the settlement day to release funds for maturing Treasuries, but sometimes it does it earlier during the day. But the funds for earlier auction purchases of Treasuries are due in the morning of the settlement day (or, brokers expect it then). So, there is a slight mismatch when you are covering Treasury auction purchase with a maturing one on the settlement day, but most brokers don't fuss over it, and everything looks fine the next day.
Quick update on a Schwab issue I had mentioned previously,
I recently noticed that in all my Schwab accounts I am now able to place a buy stock / ETF order first and then place a sell MM order to cover for the buy. This means that I am also able to place resting limit GTC orders without having to sell MM before the buys are filled.
Not sure when they made that change but I discovered it last week. If this issue is of interest to you, check your accounts.
this is what i mentioned earlier. i've been able to do it for several months. quite a nice feature and not something that works for me at fidelity.
@linter If your fill happens in the last minute, can you sell the next day & all is good? Or do you check brokerage every day, say in the last 10 minutes? Or do you receive confirmation via text or e-mail when your order gets filled? Thank you, Derf
@linter If your fill happens in the last minute, can you sell the next day & all is good? Or do you check brokerage every day, say in the last 10 minutes? Or do you receive confirmation via text or e-mail when your order gets filled? Thank you, Derf
I would think this is another good reason to use cash-like ETFs that do trade in the aftermarket, just in case you missed selling your MMF during the regular session?
Another quick update on the Schwab issue we are discussing lately.
Today, I sold a position in my trading account (IRA). I tried to sweep in the proceeds into MM but Schwab did not accept buy order, with the Order Message that I do not have sufficient funds for the buy order. I did have resting GTC limit buy orders that slightly exceed the sell proceeds. I would not have this issue at Fidelity.
So, the Schwab fix to allow buys without first selling MM is not perfect or the refusal to accept my buy MM order today could just be a tech glitch because Schwab does have many tech bugs. I was able to cancel the GTC resting buy orders and place the MM buy order and then put the GTC buy orders again.
I would be interested in those ETFs with narrow bid ask spreads in the after hours.
SGOV spread is 1 cent as of 1705, which is the same as it was during the regular session. I presume I could sell some if I wanted to ... but not going to worry about it.
Thanks Rick. After hours b/a size is 150, which is very good. That is about $1.5M a trade. Works for me. Bought using available cash in all the accounts so I remember to use it later.
I checked several ultra-ST bond ETFs and they trade after-hours too. If bid-ask is wide, use limit-orders. So, it isn't necessary buy additional ultra-ST bond ETFs for this flexibility.
"it isn't necessary [to] buy additional ultra-ST bond ETFs for this flexibility."
Except USFR in my taxable accounts, I had sold all my ultra-short bond ETFs. I just went to MM funds for simplicity. Since I am buying them now for the after hours flexibility, I figured I go with the one with most liquidity. I know JPST is also big but it can trade weird. I think I will stick with SGOV for this purpose.
In after hours trade, always use limit orders even if the security is God like.
Quick update on a Schwab issue I had mentioned previously,
I recently noticed that in all my Schwab accounts I am now able to place a buy stock / ETF order first and then place a sell MM order to cover for the buy. This means that I am also able to place resting limit GTC orders without having to sell MM before the buys are filled.
Not sure when they made that change but I discovered it last week. If this issue is of interest to you, check your accounts.
this is what i mentioned earlier. i've been able to do it for several months. quite a nice feature and not something that works for me at fidelity.
This is odd. I have had the same issue but in reverse: trading against MM balance always works for me @ Fidelity but often glitches out @ Schwab.
The solution Schwab's tech desk rep - who said it was a known issue - gave me was to put in a sell order on MM, then enter the primary trade, then cancel the MM order. This has worked every time I got the glitch so far. Perhaps, this might work for you @ Fidelity as well...
@yugo So if I'm reading you right, after market close & account settles , your purchase shows & MM has been lowered by the cost of purchase? Thanks, Derf
@yugo So if I'm reading you right, after market close & account settles , your purchase shows & MM has been lowered by the cost of purchase? Thanks, Derf
@Derf It depends on whether you are referring to Fidelity or Schwab.
At Fidelity, this is basically how it works, though - unlike sweep cash MM funds or bank accounts - there is a separate automatic MM sale happening which you can track but conveniently do not have to bother placing. (Technically, once your buy order executes, Fidelity automatically places an offsetting MM sell trade. So, until the MM sell trade settles, you see a pending debit in your account for the trade amount which is then satisfied - usually after market closes but occasionally on the next day - by the proceeds from the MM sale.) Another nice feature - not listed anywhere that I've seen but confirmed - is that if you hold multiple eligible MM funds, Fidelity will sell the the lowest yielding one first but will not zero it out if MM fund has a large buy-in.
At Schwab, it's a bit clunkier. They do not automatically make an offsetting trade. So, once your buy order goes through, they post a debit to the account which you have to satisfy by manually placing an offsetting MM sell order (or adding cash funds in other ways). This used to be a nice perk, since you could delay placing the MM sell order by a couple of days for a bit of extra yield, particularly if the trade was sufficiently sizable. With T+1 settlement this became less meaningful, but the hassle of having to place the MM sell trade manually - and to monitor GTC orders in case one of them executes - remains.
@yugo This is what I was referring to: "The solution Schwab's tech desk rep - who said it was a known issue - gave me was to put in a sell order on MM, then enter the primary trade, then cancel the MM order. This has worked every time I got the glitch so far. Perhaps, this might work for you @ Fidelity as well... "
It works w/o margin. I placed a test order (not entered, just reviewed) in my Schwab IRA (no margin with IRA accounts). I got a warning about potential freeriding:
1. Caution: This buy order was accepted without sufficient settled funds to trade in your account. If you subsequently sell this security without first delivering sufficient cash by settlement date, you may incur a trading restriction requiring settled cash up front for future purchases. (AC176)
An online cash transfer was initiated to transfer cash from my credit union to Schwab. A buy order (equal to cash transfer) was then immediately submitted to purchase additional shares of a mutuaI fund in my taxable account. The same warning message was displayed but the order was submitted without issue. I do not have a Schwab margin account.
Presumably initiated from the Schwab side. If it were initiated from the credit union side, Schwab wouldn't know about it until the money hit. At that point it would be immediately available.
Fidelity also makes some money that you pull immediately available for trading. Typically this is limited to $25K. I don't know whether Schwab sets a similar limit.
Presumably initiated from the Schwab side. If it were initiated from the credit union side, Schwab wouldn't know about it until the money hit. At that point it would be immediately available.
Yes, online transfer was initiated from Schwab side.
Comments
The way I understand the issue is that the Treasury has until midnight on the settlement day to release funds for maturing Treasuries, but sometimes it does it earlier during the day. But the funds for earlier auction purchases of Treasuries are due in the morning of the settlement day (or, brokers expect it then). So, there is a slight mismatch when you are covering Treasury auction purchase with a maturing one on the settlement day, but most brokers don't fuss over it, and everything looks fine the next day.
Thank you, Derf
I would be interested in those ETFs with narrow bid ask spreads in the after hours.
Today, I sold a position in my trading account (IRA). I tried to sweep in the proceeds into MM but Schwab did not accept buy order, with the Order Message that I do not have sufficient funds for the buy order. I did have resting GTC limit buy orders that slightly exceed the sell proceeds. I would not have this issue at Fidelity.
So, the Schwab fix to allow buys without first selling MM is not perfect or the refusal to accept my buy MM order today could just be a tech glitch because Schwab does have many tech bugs. I was able to cancel the GTC resting buy orders and place the MM buy order and then put the GTC buy orders again.
Except USFR in my taxable accounts, I had sold all my ultra-short bond ETFs. I just went to MM funds for simplicity. Since I am buying them now for the after hours flexibility, I figured I go with the one with most liquidity. I know JPST is also big but it can trade weird. I think I will stick with SGOV for this purpose.
In after hours trade, always use limit orders even if the security is God like.
The solution Schwab's tech desk rep - who said it was a known issue - gave me was to put in a sell order on MM, then enter the primary trade, then cancel the MM order. This has worked every time I got the glitch so far. Perhaps, this might work for you @ Fidelity as well...
Thanks, Derf
At Fidelity, this is basically how it works, though - unlike sweep cash MM funds or bank accounts - there is a separate automatic MM sale happening which you can track but conveniently do not have to bother placing. (Technically, once your buy order executes, Fidelity automatically places an offsetting MM sell trade. So, until the MM sell trade settles, you see a pending debit in your account for the trade amount which is then satisfied - usually after market closes but occasionally on the next day - by the proceeds from the MM sale.) Another nice feature - not listed anywhere that I've seen but confirmed - is that if you hold multiple eligible MM funds, Fidelity will sell the the lowest yielding one first but will not zero it out if MM fund has a large buy-in.
At Schwab, it's a bit clunkier. They do not automatically make an offsetting trade. So, once your buy order goes through, they post a debit to the account which you have to satisfy by manually placing an offsetting MM sell order (or adding cash funds in other ways). This used to be a nice perk, since you could delay placing the MM sell order by a couple of days for a bit of extra yield, particularly if the trade was sufficiently sizable. With T+1 settlement this became less meaningful, but the hassle of having to place the MM sell trade manually - and to monitor GTC orders in case one of them executes - remains.
Thanks for your reply, Derf
A buy order (equal to cash transfer) was then immediately submitted to purchase
additional shares of a mutuaI fund in my taxable account.
The same warning message was displayed but the order was submitted without issue.
I do not have a Schwab margin account.
Presumably initiated from the Schwab side. If it were initiated from the credit union side, Schwab wouldn't know about it until the money hit. At that point it would be immediately available.
Fidelity also makes some money that you pull immediately available for trading. Typically this is limited to $25K. I don't know whether Schwab sets a similar limit.
https://www.reddit.com/r/fidelityinvestments/comments/16hzb36/fidelity_limit_25k_usd/
In IRA trades, it accepted sell (OEFs or ETFs or CEFs) and then immediate buy (OEFs or ETFs) orders when there wasn't enough cash in the core a/c.
May be this started when T+1 for all went into effect.
Before, Schwab didn't accept some of these trades when OEFs were T+1 but ETFs T+2.