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Valued Contributor

Re: Fidelity Core/Settlement Account [Multiple M-Mkt Funds]


@yogibearbull wrote:

I had a chance to observe how Fido handles multiple m-mkt funds.

In one account, gov SPAXX is the designated core and there is also higher rate retail-prime SPRXX. Before making a fund buy [settles T+1], the core SPAXX had insufficient funds, but noncore SPRXX had more than enough. Surprisingly the Balance tab already showed total m-mkt balance as core/cash, cash available to trade, cash available to withdraw. So, both m-mkt funds seemed linked internally.

Now what happened after fund buy transaction.

On T+1, core SPAXX was zeroed out. The Position screen showed pending activity for the remainder at the bottom; the Balance tab showed negative for the remainder.

On T+2, I saw that a redemption for the remainder amount was auto-entered for the noncore SPRXX and everything was evened out on T+2.

So, my conclusion is that both m-mkt funds [core & noncore] were internally linked, Fido sort of extended 1-day credit for the buy transaction, and settled everything on T+2.

I wish Schwab would also do something similar. There, Schwab Bank is the core/settlement but it pays little. If there is a cash shortage after a transaction, Schwab can start to liquidate holdings at random to cover cash shortage and that can be bad. It would be nice if Schwab would do that from m-mkt funs(s) [all noncore] first. May be it would, but I don't want to test it as it may not.


I sent a secure email to Schwab asking how it would handle a cash shortage from a trade. The answer unfortunately was not reassuring. Here is the exact reply but I have added highlights:

"If you did not have cash available to cover a trade (and no margin) at settlement our margins team will take action to cover the cost of the trade. There is a strong possibility that the buy order which has not been funded will be liquidated, but our margins team does reserve the right to liquidate any position in order to cover the money due."

YBB
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Participant ○

Re: Fidelity Core/Settlement Account [Multiple M-Mkt Funds]

At Vanguard brokerage, MM settlement fund is drawn down T+1 even for ETF buys.  That was a surprise.

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Re: Fidelity Core/Settlement Account [Multiple M-Mkt Funds]


@Anitya wrote:

At Vanguard brokerage, MM settlement fund is drawn down T+1 even for ETF buys.  That was a surprise.


At Vanguard you can also initiate a transfer in and then immediately trade on those funds, even though they are not fully settled and available for withdrawal. I found that a surprise as well.

Capital
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Re: Fidelity Core/Settlement Account

I'm having trouble reaching a fidelity Rep.  Can anyone tell me where on Fidelity's website to convert a mm settlement account to a insured bank account?

helmut

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Valued Contributor

Re: Fidelity Core/Settlement Account


@helmut wrote:

I'm having trouble reaching a fidelity Rep.  Can anyone tell me where on Fidelity's website to convert a mm settlement account to a insured bank account?

helmut


In taxable account, you can change among SPAXX, FZFXX, FCASH by clicking on your Core/Settlement fund - none is bank related but gov SPAXX and FZFXX are fine; FCASH doesn't pay as well. If you want brokered bank CDs, you can purchase those too from trading screen - fixed-income.

Only IRAs have have SPAXX or bank sweep.

https://www.fidelity.com/trading/faqs-about-account-c?version=v2&s_tnt=123583:2:0

YBB
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Participant ○○○

Re: Fidelity Core/Settlement Account

Probably easiest to go to Account, Investments, Cash Management Solutions, then open the FDIC insured link. After you open the account, you can transfer in from your MM


@helmut wrote:

I'm having trouble reaching a fidelity Rep.  Can anyone tell me where on Fidelity's website to convert a mm settlement account to a insured bank account?

helmut


 

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Re: Fidelity Core/Settlement Account

Thanks all, Probably not needed but until we actually get through this storm I'm going to be extra cautious.

helmut

 

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Contributor ○

Re: Fidelity Core/Settlement Account


@helmut wrote:

I'm having trouble reaching a fidelity Rep.  Can anyone tell me where on Fidelity's website to convert a mm settlement account to a insured bank account?

helmut


@helmut: It's easy to convert to an FDIC insured option in an IRA account. Don't think this option is also available in an Individual account:

- Go to "All Accounts" on the Fidelity site and click on "CORE" in your IRA account,

- Select "Change Core Position",

- Under "Select a New Core Position", choose "FDIC Insured Deposit Sweep Program",

- Select "Preview Order" and then submit.

You can also select "View Program Bank List" before submitting your order to get an overview of the program, and find out what the current interest rate for your deposit is. If I recall correctly, it was significantly lower than Fidelity's MM funds.

Another option would be to check out Fidelity's Treasury Only MM fund, FDLXX. As you know, Treasuries are backed by the full faith and credit of the United States. This option will also act as your settlement account and is available for Individual and IRA accounts.

Good luck,

Fred

 

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Re: Fidelity Core/Settlement Account


@helmut wrote:

Thanks all, Probably not needed but until we actually get through this storm I'm going to be extra cautious.

helmut

 


I regretted my post soon after posting. I really don't want to encourage anyone to participate on the run in MMs. I don't think its in anyones interest.

 

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