This has not been my experience at Vanguard. For example, if I have a T-bill maturing on the 15th, I have the interest added to my settlement account on the 15th and I can include that interest in any trades within the account (buying an ETF or mutual fund). However, the principal--or the original amount at the purchase of the T-bill--does not show up in my settlement until the 16th. I've never tried to withdraw any of the funds from the account while they're still "pending" or "credited."Vanguard brokerage mechanics for maturing Treasury notes, based on my experience and a conversation with Vanguard:
Assume a note maturing on the 15th. Vanguard should get the maturing principal and interest from the treasury on the 15th. The principal and interest should be available in your settlement fund on the 15th. However, it will not show online on the 15th. There will be an overnight process resulting in principal showing in your settlement account and interest as a credit, and the sum of both will show as "available to trade" and "available to withdraw", all on the 16th. If you go online on the 16th you will only be able to use the amount in the settlement account (the matured principal), not the interest. The interest will show online as a credit on the 16th and then in the settlement account on the 17th, so you can't use the interest online until two days after Vanguard receives it. You should be able to call on the 15th (perhaps later in the day) and be able to execute a trade with the full principal and interest, according to Vanguard reps.
That you can't trade online with the full principal and interest on the 15th makes little sense to me and that interest is delayed an additional day makes even less sense.
Do others have the same experience and are things different at Fidelity and Schwab?
At Fidelity, everything is there on the 15th ready to go for trading and withdrawals.
Vanguard has its quirks but at least you can place an order for an auction regardless of what's in your settlement account. As long as the money is there by the settlement date, you're fine. At Fidelity, my experience has been that you can't place an order for the auction until the face value is in your cash account. This is more annoying than my experiences at Vanguard: at Fidelity, why should I have $100,000 in my cash account at Fidelity in order to place an order for a 100 T-bill auction when I couldn't possibly need $100,000 on the settlement date? Perhaps others have had different experiences but I've learned to deal with the idiosyncrasies of both Vanguard and Fidelity as just part of the process.
Statistics: Posted by Artsdoctor — Thu May 23, 2024 6:07 pm — Replies 4420 — Views 512455