Funding an account with a T-Bill.

if i'm not mistaken the tbills stay in the clearing houses name just like a stock. the sipc insurance is 500k just like a stock. you can't buy a tbill in your name the broker goes under and you say goodby i'm taking my cash. it will be distributed out by the sipc jsut like any other stock that a bk broker holds. many brokers out there paying 1% or less on free cash screwing people
 
Quote from Nattdog:
You never have a reason to sell T bills every week. most use the 13 week bill.
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Spoken like one who has never traded futures in a large account.

The reason people buy and sell T-bills every week is, because their account equity fluctuates. When the markets move in the same directions as your futures positions, your account equity goes up. In a futures account (unlike a stock account), this daily fluctuation is real honest-to-goodness liquid cash in your account -- in futures, there's no such thing as "paper profit". However it is daily fluctuation cash that isn't earning interest. What do you do when cash goes up? You put it to work earning interest ... you buy more T-bills.

Naturally the downside is similar. When the markets move opposite to your positions, your account equity fluctuates downwards. When (cash + Open Trade Equity) goes negative, you and/or your broker's margin department "break" (sell) one or more of your T-bills to get the balance back positive.

If your account equity fluctuates more than (say) 20K or 30K dollars per week, which it definitely does for some futures traders, then you'll be buying and selling Tbills every week in order to earn the maximum possible interest. On the other hand you'll be at least half way to the magical "Two Comma Account Size" that gets you Institutional account privileges, including automatic money market interest on 100% of your daily cash balance. In that case, someone else is now in charge of fooling with T-bills. Not you any longer.
 
well, i traded futures with a pure futures broker, purchasing T bills every three months, for about 10 years.

currently trade with a hybrid broker that allows a money market type fund, so memory plus exact knowledge of the rules is not 100%, as I tried to make clear.

but I am certain you have more experience than this.
 
Quote from Nattdog:
well, i traded futures with a pure futures broker, purchasing T bills every three months, for about 10 years.
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Nattdog, do you mean that you traded futures in a large account, with equity fluctuations of 20K to 30K per week, and only purchased T bills every three months? If so, why didn't you buy additional T bills with the interim profits that stacked up in between your every-3-months re-ups? It sounds like you willingly declined Free Money. :eek:
 
What's a good rate to earn as interest.

A broker is offering me x% of the t-bill rate less z bps.

So my question is what values of x & z above would result in a competitive interest rate to earn on balances.

Thanks!

Quote from horribilicus:




If you shop around, and if you have a sufficiently large account, you can find FCMs who don't monkey around with T-bills at all. Instead they just pay you a money market interest rate on your daily (cash + open trade equity) balance. It's usually pegged to some index, such as "LIBOR minus 50 basis points" or "EONIA minus 75 bips" etc. The advantage of this is, you don't have to mess around buying and selling T-bills every week, and it pays interest on ALL your cash; there is no "cushion" that earns nothing. The disadvantage is, if the FCM goes Refco (bankrupt) then more of your money is potentially at risk.

Finally, there are FCMs which also operate stock brokerages (example: Morgan Stanley). If you are a big enough player you can negotiate a deal to let assets in your stock account, serve as margin for your futures account. You can buy T-bills etc in your stock account, and let them margin (at some reduced rate like 95% or 90%) your futures trades.
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U.S. Treasury securities are a great way to invest and save for the future.


"...When an investor purchases securities through a broker, dealer, or
financial institution, the securities are held on the book-entry
system of that firm. Holding Treasury securities in this manner is
known as indirect holding since there is one or more entities between
the investor and the issuer (U.S. Treasury)..."

http://www.treasurydirect.gov/instit/auctfund/held/cbes/cbes.htm

"...How do I transfer securities from my broker/dealer account into my
TreasuryDirect account? Contact your broker to transfer securities to your
TreasuryDirect account. Your broker will require the following delivery
information, formatted as shown:

Receiving bank name – TREASURYDIRECT (All caps, no spaces)
ABA Number – 051736158
Your TreasuryDirect account number..."

"...Can I transfer marketable securities out of my TreasuryDirect account?
Yes. However, securities purchased through TreasuryDirect are not eligible
for transfer until 45 days after the issue date. Securities may be
transferred to another TreasuryDirect account or to a broker/dealer account.
Securities transferred into TreasuryDirect from an outside account are not
restricted by this Original Issue Holding Period. External transfers to a
broker/dealer account may be requested for individual or multiple securities.
We recommend you verify the financial institution's routing number, name,
and special handling instructions prior to requesting the transfer..."


"...TreasuryDirect is the first and only financial services website that lets
you buy and redeem securities directly from the U.S. Department of the Treasury
in paperless electronic form. The public can enjoy the flexibility of managing
a savings portfolio online as needs and financial circumstances change
<b>All the time knowing that the money is backed by the full faith and credit
of the U.S. government.</b>..."


Hope this helps

WinDiff
:)
 
What's a good rate to earn as interest.

A broker is offering me x% of the t-bill rate less z bps.

So my question is what values of x & z above would result in a competitive interest rate to earn on balances.

Thanks!
 
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