Source
r/fidelityinvestments•
CorrectlyKnown

Auto-rolling bonds alongside money market for cash

Official Response

I have an account that roughly has these positions:

  • FZCXX (money market): $50,000
  • 4-Week T-Bills (maturity 11/29/2022): $200,000 w/ auto-roll enabled

Prior to last Wednesday, "cash available to withdraw" in the Balances tab was reported as $50,000, as I expected. I use the debit card and checkwriting with this account, and those amounts are debited from the FZCXX as I expect.

Last Wednesday, the auto-roll on the T-bills executed and the account now shows these positions:

  • FZCXX: $50,000
  • 4-Week T-Bills (maturity 11/29/2022): $200,000
  • 4-Week T-Bills (maturity 12/27/2022): $200,000

However, "cash available to withdraw" in the Balances tab is now reported as $0.

I understand that auto-roll needs to purchase new bills before the older bills fully mature because of the delay in settlement. However, I am concerned about what "cash available to withdraw" at $0 means for my use of cash in the account.

If I tried to use the debit card associated with the account or a check was submitted against the account, would it clear using the $50,000 in the money market fund or would it be rejected?

Posted Nov 28, 2022, 1:14 AM UTC

109
InfernoExpedition•

Hopefully that is just a bug on the display of available cash….otherwise, that’s terrible.

3
SquattyLaHeron•

Someone else reported this bug and no one replied officially. Very bad.

4
[deleted]•

[deleted]

1
iranisculpable•

This is why you add margin to your accounts.

1
FidelityEmilioMODCommunity Care Representative :MicrosoftTeams-image_22:•

Hello u/CorrectlyKnown, thanks for stopping by, and we appreciate you sharing your experience.

At this time, the available cash may be affected in the days leading up to the purchase of the new security, if the account is utilizing the Auto Roll feature. With the Auto Roll feature, we are placing an order for the new securities before the proceeds from the maturing securities are received. You may consider opening a free, separate account to hold your fixed income securities with the Auto Roll feature.

With that said, I will pass feedback on this to the appropriate teams on your behalf.

You can always contact our 24/7 team by phone to discuss any uncertainty about your balances. While we do our best to respond here on social media as quickly as possible, some time-sensitive situations may be better suited for a phone call.

Contact Us

1
CorrectlyKnownOP•

Thank you for responding. I appreciate hearing about the workaround of opening a separate account, but it would be much more convenient for me to keep things in a single account. Please do pass along feedback about this.

1
CorrectlyKnownOP•

Hi u/FidelityEmilio, one more follow up question: How would this change if I had a margin account? Would I be able to still spend the money market funds while the trade was unsettled? Would I incur margin interest?

1
FidelityJamesMODCommunity Care Representative :MicrosoftTeams-image_22:•

I know the correct answer to this, u/CorrectlyKnown.

If you have a margin account, any transactions such as a debit card purchase, or writing a check would generate a margin debit. Margin interest would accrue until the debit is fully payed off. It is important to note, as long as you have cash in your core or other money markets, they would auto liquidate to cover the margin debit so you do not incur interest.

Margin trading entails greater risk, including, but not limited to, risk of loss and incurrence of margin interest debt, and is not suitable for all investors. Please assess your financial circumstances and risk tolerance before trading on margin. If the market value of the securities in your margin account declines, you may be required to deposit more money or securities in order to maintain your line of credit. If you are unable to do so, Fidelity may be required to sell all or a portion of your pledged assets. Margin credit is extended by National Financial Services, Member NYSE, SIPC.

1
thelonewanderer44•

So if I have an account where the only positions in the account are treasury bills (no cash) and I have Auto Roll enabled, will new Auto Roll bills be purchased using the principal of the old bills that have matured?

1
CorrectlyKnownOP•

Based on my experience, the answer is yes. But if you also have cash in the account (e.g., in a money market), that cash will be locked up to the amount of the new purchase until the trade settles. That is what burned me.

1