Per BBG:
Fidelity Investments and Charles Schwab Corp. are prohibiting clients from investing in money-market ETFs on their trading platforms, an unusual move for the financial powerhouses who typically permit easy access to funds that already trade on an exchange.
The two firms are blocking purchases of three exchange-traded funds offered by BlackRock Inc. and Texas Capital, the first to track money—market securities such as Treasury bills and other government-backed debt in an ETF structure.
The new funds serve as a direct challenge to mutual-fund providers, who have long been big, established players in money-market products. Fidelity and Schwab alone manage trillions of dollars in money-market assets, and this month, Schwab filed plans to launch its own government money-market ETF.
A Schwab spokesperson said its decision is consistent with the firm’s “long-standing approach” of only making available Schwab affiliate money-market mutual funds, while a Fidelity spokesperson said this is an extension of the company’s policy to “generally restrict” third-party money-market mutual funds.
Yet, the move stands out because trading platforms like Schwab and Fidelity typically don’t restrict exchange-traded funds, even if those funds are in competition with existing in-house offerings.
In Schwab's case, they need to drive folks into their MMFs because even there they profit from customers' stored cash with those more expensive MMFs. Fido's rationale, I can't tell -- I thought they had more customer-friendly cash management policies/offerings.
I'll stick with SGOV or equivalents at Schwab.
Comments
I have not checked to see if it is FDIC insured but I don't think so
"Taxable Interest Bearing Cash Option (FCASH), a free credit balance and is payable to you on demand by Fidelity. Fidelity may use this free credit balance in connection with its business, subject to applicable law. Fidelity may pay you interest on this free credit balance, and this interest will be based on a schedule set by Fidelity, which may change from time to time. As of December 23, 2024, the interest rate for this option is 2.19%."
The advisor we are talking to says they are forced to trade into Government MMF nightly just to get a better rate.
It is interesting that Fido thinks it can stiff Advisors who have Billions under management like this.
There are a number of short term Treasury Bill ETFs like BIL very similar to Texas Capital product. I wonder if they will go after them too?
This seems designed to po BlackRock
@sma3,
If Fidelity also has an internal Advisory Service, it would be good to know what type of sweep funds they have access to for their clients.
https://www.fidelity.com/wealth-management/wealth-management-detail Not the easiest doc to find. The Programs Fundamentals doc that is online is dated March 28, 2024: https://www.fidelity.com/bin-public/060_www_fidelity_com/documents/FWS-program-fundamentals.pdf
Does anyone know why Fidelity now only allows one to cancel USFR sell orders but does not allow one to replace the order?
I wanted to go from a limit order to a market order, I had to cancel the existing limit order and then enter a new market order. Not an issue with other ETFs I tested. I did not have this issue with USFR on prior occasions.
The same issue is not present on the USFR buy order. SGOV is fine.
I do not have anymore USFR at Fidelity. The same issue is not present at Schwab where I had some leftover USFR shares. SGOV has been my preferred MM equivalent ETF ever since you mentioned about it. I really like its large market price and thus the minimal loss on the B/A spread. I will accept the potential leakage of state tax exemption on SGOV vs USFR.