Difference in handling T-bill maturity between Fidelity and Etrade

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student
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Difference in handling T-bill maturity between Fidelity and Etrade

Post by student »

I have T-bills maturing today in both Fidelity and Etrade. It seems that they handle the situation differently. At Fidelity, the T-bill has already been "redeemed" and the money is available. However, at Etrade, it has not been "redeemed" yet and based on my experience, the money will be available tomorrow. Etrade uses the same system for CD also. So perhaps maturity at Fidelity means at the beginning of the day whereas at Etrade, it is at the end of the day. But for T-bills, shouldn't there be a uniform way? Please educate me.
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student
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Re: Difference in handling T-bill maturity between Fidelity and Etrade

Post by student »

Today I had a T-bill matured at Schwab, which was handled the same as Fidelity. Maybe this is a way for Etrade to squeeze one day of free interest to itself?
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retired@50
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Re: Difference in handling T-bill maturity between Fidelity and Etrade

Post by retired@50 »

Why do you have accounts at Fidelity, Schwab & E-Trade?

Consolidate.

Regards,
If liberty means anything at all it means the right to tell people what they do not want to hear. -George Orwell
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student
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Re: Difference in handling T-bill maturity between Fidelity and Etrade

Post by student »

retired@50 wrote: Tue Oct 11, 2022 8:19 pm Why do you have accounts at Fidelity, Schwab & E-Trade?

Consolidate.

Regards,
I left e-trade before but they offered me a bonus to come back. This is when T-bills started giving better rate than HYSC, so moved all my cash to e-trade for the bonus and started buying T-bills there.
Kenneth Almquist
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Re: Difference in handling T-bill maturity between Fidelity and Etrade

Post by Kenneth Almquist »

student wrote: Tue Oct 11, 2022 6:03 pm Today I had a T-bill matured at Schwab, which was handled the same as Fidelity. Maybe this is a way for Etrade to squeeze one day of free interest to itself?
It's either that or risk avoidance--specifically the risk that a client will make a purchase and won't pay for it. (This could in principle happen if the Federal Government defaults rather than making the payment due when the T-bill matures.)

You have a similar problem if you have funds in a money market fund and you want to invest them in something else. To do that at E*Trade, you have to sell the money market fund and then wait until the next day (when E*Trade has the cash in hand) to enter a buy order. Unfortunately, E*Trade's policies in this regard don't appear to be documented anywhere.
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student
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Re: Difference in handling T-bill maturity between Fidelity and Etrade

Post by student »

Kenneth Almquist wrote: Tue Oct 11, 2022 10:50 pm
student wrote: Tue Oct 11, 2022 6:03 pm Today I had a T-bill matured at Schwab, which was handled the same as Fidelity. Maybe this is a way for Etrade to squeeze one day of free interest to itself?
It's either that or risk avoidance--specifically the risk that a client will make a purchase and won't pay for it. (This could in principle happen if the Federal Government defaults rather than making the payment due when the T-bill matures.)

You have a similar problem if you have funds in a money market fund and you want to invest them in something else. To do that at E*Trade, you have to sell the money market fund and then wait until the next day (when E*Trade has the cash in hand) to enter a buy order. Unfortunately, E*Trade's policies in this regard don't appear to be documented anywhere.
Thanks for the info.
stocknoob4111
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Re: Difference in handling T-bill maturity between Fidelity and Etrade

Post by stocknoob4111 »

At Schwab they don't allow me to buy until external funds hit the account... at Fidelity I can purchase immediately after I initiaye funding which is why I like Fidelity better
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student
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Re: Difference in handling T-bill maturity between Fidelity and Etrade

Post by student »

stocknoob4111 wrote: Tue Oct 11, 2022 11:00 pm At Schwab they don't allow me to buy until external funds hit the account... at Fidelity I can purchase immediately after I initiaye funding which is why I like Fidelity better
Yes. This is true. Etrade also allows this if you have enough assets in the account. For example, you have assets of $10k and you transfer $11k fund into the account, then $10k will be available right away and 1k has to wait. I do not know whether Fidelity uses something similar.
Hebell
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Re: Difference in handling T-bill maturity between Fidelity and Etrade

Post by Hebell »

student wrote: Tue Sep 13, 2022 11:16 am I have T-bills maturing today in both Fidelity and Etrade. It seems that they handle the situation differently. At Fidelity, the T-bill has already been "redeemed" and the money is available. However, at Etrade, it has not been "redeemed" yet and based on my experience, the money will be available tomorrow. Etrade uses the same system for CD also. So perhaps maturity at Fidelity means at the beginning of the day whereas at Etrade, it is at the end of the day. But for T-bills, shouldn't there be a uniform way? Please educate me.
Just to confirm, as I have my first T-bills maturing at Fidelity and Etrade in the coming 3 weeks:

* Etrade will show the funds the DAY AFTER the maturity date. Do you see anything at all different on the day of maturity? (For example, notice of pending redemption)?

* Fidelity will deposit the funds the DAY OF maturity.

* I assume both of these brokerages show this as a TRANSACTION in the transaction view? (i.e., addition to cash balance?)
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student
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Re: Difference in handling T-bill maturity between Fidelity and Etrade

Post by student »

Hebell wrote: Sat Oct 15, 2022 11:11 am
student wrote: Tue Sep 13, 2022 11:16 am I have T-bills maturing today in both Fidelity and Etrade. It seems that they handle the situation differently. At Fidelity, the T-bill has already been "redeemed" and the money is available. However, at Etrade, it has not been "redeemed" yet and based on my experience, the money will be available tomorrow. Etrade uses the same system for CD also. So perhaps maturity at Fidelity means at the beginning of the day whereas at Etrade, it is at the end of the day. But for T-bills, shouldn't there be a uniform way? Please educate me.
Just to confirm, as I have my first T-bills maturing at Fidelity and Etrade in the coming 3 weeks:

* Etrade will show the funds the DAY AFTER the maturity date. Do you see anything at all different on the day of maturity? (For example, notice of pending redemption)?
Correct. The day after. Regarding notice of pending redemption, yes assuming you set it up in the notification preference.
Hebell wrote: Sat Oct 15, 2022 11:11 am * Fidelity will deposit the funds the DAY OF maturity.
Correct. And it is available for you to trade.
Hebell wrote: Sat Oct 15, 2022 11:11 am * I assume both of these brokerages show this as a TRANSACTION in the transaction view? (i.e., addition to cash balance?)
Yes. For example, in etrade, redemption is stated as reorganization.
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Re: Difference in handling T-bill maturity between Fidelity and Etrade

Post by Hebell »

Yep, Etrade shows a TYPE=REORGANIZATION transaction with the title "15000 UNITED STATES TREASURY BILL RE-ISSUE 07/21/2022 BONY REDEMPTION" but the security still shows in the portfolio. The balance is not yet adjusted. Tomorrow I will expect to see the security disappear, and $15000 land in the cash balance. Thanks @student
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Re: Difference in handling T-bill maturity between Fidelity and Etrade

Post by Kevin M »

Vanguard also does not show funds available to trade until the day after maturity, and also does not show the trade in transaction history until then.
If I make a calculation error, #Cruncher probably will let me know.
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