Need help fast! Issue with brokerage transaction

[disneysteve]

I made a stock trade in my IRA on Tuesday, thinking they would take the money for it from the money market fund. Apparently, I was wrong about that. I got an email today saying I needed to deposit funds to cover the trade, which settled today. I immediately logged in and sold shares of the money market to cover the deficit but that won't settle until Monday.

I tried calling but gave up after being on hold for nearly 2 hours.

What happens now? They can see that I initiated the MM sale so will that be good enough? If not, what happens to the stock trade if the funds aren't present? Do they just cancel the trade? I can't deposit outside money because it's an IRA. There's plenty in the money market to cover it. It just needs to be moved to the right place apparently.

[corn18]

I made a stock trade in my IRA on Tuesday, thinking they would take the money for it from the money market fund. Apparently, I was wrong about that. I got an email today saying I needed to deposit funds to cover the trade, which settled today. I immediately logged in and sold shares of the money market to cover the deficit but that won't settle until Monday.

I tried calling but gave up after being on hold for nearly 2 hours.

What happens now? They can see that I initiated the MM sale so will that be good enough? If not, what happens to the stock trade if the funds aren't present? Do they just cancel the trade? I can't deposit outside money because it's an IRA. There's plenty in the money market to cover it. It just needs to be moved to the right place apparently.

Are you able to see all of the balances? On Fidelity's web site, I have a tab called balances. It shows cash available to trade, settled cash and cash available to withdraw. When you initiate a MM sale, it should instantly show up as cash available to trade. You can't move it as cash or withdraw it, but it will cover any trades you have made that need coverage.

[kork13]

I expect that your money market fund is not your designated "settlement fund" which is why it didn't pull from there. From what I've read, my understanding is that the worst they'll do is:
1) sell another holding to cover your trade
2) restrict your account from making additional stock trades for up to 90 days (though I think that's only after you do this a few times)

The fact that your have the MMF sale going, it probably won't trigger any further actions, besides a stern email reminding you of the policy. But even in the worst case, it would only be bothersome, nothing overly problematic.

For info on their policies, search for "non-covered trades" on their site.

[disneysteve]

Are you able to see all of the balances? On Fidelity's web site, I have a tab called balances. It shows cash available to trade, settled cash and cash available to withdraw. When you initiate a MM sale, it should instantly show up as cash available to trade.

I can see all of that but the MM order is still showing as open. I placed it at 11:12 AM today, so over 4 hours ago. It is not yet showing up as funds available to trade. I'm guessing since it's a mutual fund, it only transacts at close of business. Once that order executes, hopefully the issue will resolve itself.

[Like2Plan]

That is really strange. I am assuming that you use Vanguard as your trading platform? On my account it has Vanguard Federal Money Market Fund (settlement fund). I don't have to do anything--all the money in this MMF is available to trade. Is your money market fund your designated settlement fund?

But, did your actions (your MM sale) clear up the problem?

[disneysteve]

That is really strange. I am assuming that you use Vanguard as your trading platform? On my account it has Vanguard Federal Money Market Fund (settlement fund). I don't have to do anything--all the money in this MMF is available to trade. Is your money market fund your designated settlement fund?

But, did your actions (your MM sale) clear up the problem?

This wasn't in my Vanguard account. My traditional IRA is with Schwab. But even with Vanguard, there is a difference between your settlement fund and any money market mutual fund you may have. I have had to transfer money from my MM to my settlement fund, so I really should have known better, but I almost never do any transactions in my IRA so I just didn't think about it.

[Like2Plan]

But even with Vanguard, there is a difference between your settlement fund and any money market mutual fund you may have. I have had to transfer money from my MM to my settlement fund, so I really should have known better, but I almost never do any transactions in my IRA so I just didn't think about it.

Ah-- I don't know anything about the Schwab platform.
But, on Vanguard my MM is my settlement fund so, any money I deposit from my bank for trades goes in there. (It also has "funds available to trade" which is nice to know because sometimes it gets confusing with stuff that has not settled yet). What do you have designated as your settlement fund? I thought a MM fund was the only choice, but to be honest--when I set the brokerage account up I had a customer rep help me set it up. (At the time, I just wanted to set up an individual account to buy mutual funds--and they were switching over to their new platform that required setting up a brokerage account--which was a new thing for me.)

[disneysteve]

on Vanguard my MM is my settlement fund

The Vanguard Federal Money Market Fund is the settlement fund. However, you can also have a money market fund in your portfolio as a separate holding. In the current interest rate environment, it probably doesn't much matter but in the past, there were times when one MMF was paying more than another so leaving cash sitting in the settlement fund wasn't the best option.

ETA: I just remembered what happened. I had a MMF in my Vanguard account before it got converted to a brokerage account, so I didn't have a settlement fund then. Once it got converted, they added the settlement account automatically, but I still had the other MMF. I need to close that out. Thanks for reminding me.

[cypher1]

The Vanguard Federal Money Market Fund is the settlement fund. However, you can also have a money market fund in your portfolio as a separate holding. In the current interest rate environment, it probably doesn't much matter but in the past, there were times when one MMF was paying more than another so leaving cash sitting in the settlement fund wasn't the best option.

ETA: I just remembered what happened. I had a MMF in my Vanguard account before it got converted to a brokerage account, so I didn't have a settlement fund then. Once it got converted, they added the settlement account automatically, but I still had the other MMF. I need to close that out. Thanks for reminding me.

Speaking of settlement fund/MMF accounts, do most of you just transfer money into it on a regular basis? Or for regular investments, do you schedule to take funds directly from your banking to transfer to that account? I figure that option simply is a longer hold since funds take longer to complete transaction, while trading is still be available.

[disneysteve]

Speaking of settlement fund/MMF accounts, do most of you just transfer money into it on a regular basis? Or for regular investments, do you schedule to take funds directly from your banking to transfer to that account?

I manually deposit money into our Vanguard taxable account settlement fund once a month and then immediately invest it.

[disneysteve]

did your actions (your MM sale) clear up the problem?

When I checked last evening, it hadn't, but I just checked again and it's all clear now. The money market redemption went through and the cash went to settle the outstanding trade.

The reason I keep the cash in that account somewhere other than the settlement account is because of the interest paid being way higher on the money market.

[bjl584]

They way that my brokerage firm works, is that you have 5 business days to come up with the cash if you make a trade or do a ACH transaction.
not sure how yours operates