Are you mainly buying HSAV.TO or CASH.TO | Page 3 | Investing | Discussion forum

Stocks currently settle T+2 days. Brokerage ISA's settle T+1 day. Consequently, one doesn't need margin and can buy the stock as soon as one's broker recognizes the buying power added by the "sell" of a brokerage ISA.

That recognition depends on the broker. I've found that Scotia iTRADE recognizes the buying power in such cases within an hour.

mordko said
In Questrade you can use proceeds the moment you sell without waiting for settlement.  

That's great to know as I am with Questrade. Also I just now found these Purpose US Funds

Is the risk different in the below 2 products
Purpose USD Cash Management Fund F: F: PFC7981 0.20% 5.46%
Purpose US Cash Fund F: PFC7701 0.15% 5.18%
The underlying securities are different but both seem to be LIQUID CASH

Norman1 said
The Purpose US$ Cash Management Funds do not hold liquid cash.

The January 2024 brochure discloses that the funds hold 95% in commercial paper. Average maturity of the holdings is 92 days.  

Also I think, the yield is higher with Purpose US Cash Fund is because of NO CDIC Coverage.

AltaRed said
No one can be short in a registered account so that is the price of admission. Wait until you have the sale of the MMF or ISA completed, or at least the order contracted. That might mean waiting one day, or in worst case 2 days.  

Yes, though this happened to me once because settlement dates were off by a day. I got an angry-sounding automated e-mail from Scotia iTRADE, but since it cleared up the next day, they didn't sell anything. So you generally have a day or so grace period. 🙂

Doug said

Yes, though this happened to me once because settlement dates were off by a day. I got an angry-sounding automated e-mail from Scotia iTRADE, but since it cleared up the next day, they didn't sell anything. So you generally have a day or so grace period. 🙂  

Was this a registered account like a TFSA?

zgic said

Doug, you are correct on the Purpose USD Cash Management Fund.
There are basically 2 funds
Purpose USD Cash Management - commercial paper
Purpose US Cash Fund - cash

Even the Cash Fund is higher yield than the other ISA USD funds like EQB1101 or EQB1100 because I think the Purpose Funds are not CDIC covered.

Like other "cash" ETF's, the Purpose US Cash Fund has a higher yield because there's no CDIC coverage and because the bank deposits are not really cash.

Last year, OSFI inquired into those so-called "cash accounts" that such ETF's were depositing funds into. OSFI received assuring submissions that those "cash" deposits contractually had "extensive withdrawal notification periods" to make them stable for the banks accepting them.

So, those "cash accounts" are not really like a regular savings account that one can withdraw from any time. They are really like those Canadian Western Bank Flex Notice Accounts that require 31 or 93 days notice of any withdrawals.

For CIBC IE, on screen cash balance may not be updated next day, but the system will allow you to put in a new stock order. If the system ‘see ‘ your account not having enough cash to cover the stock order, it will decline your buy order.

Norman1 said

mordko said
They don’t require “notice”. Under normal circumstances HISA ETFs can and are routinely sold without any notice whatsoever. Proceeds can be withdrawn on settlement, two business days after the sale. …

That's only when you can find other investors who will buy the ETF units from you.

Where there isn't enough investors and the ETF has to be the buyer through its market makers, then the ETF has to have funds avaiable to buy back the units and pay by settlement date.

Price will crater if the ETF cannot come up with the funds. It's not a bank failure if the bank refuses to provide the ETF funds early on the notice deposits.  

Could you provide a reference to an actual statement referring to “notice”? All the formal, published materials on these ETFs that I am seeing don’t even refer to “notice”.

Given that there is a 100% liquidity requirement” for these ETFs, I would be extremely concerned about overall solvency if “bank refuses” to pay up and therefore if Market Makers were to refuse to participate.

Yes, one can buy a brokerage ISA all at once in a single order and then sell partially as needed.

Some brokerage ISA's have minimum holdings. For example, BMT104 from Bank of Montreal has a $1,000 minimum. So, one has to sell all the remaining if there would be less than $1,000 left.

mordko said

Could you provide a reference to an actual statement referring to “notice”? All the formal, published materials on these ETFs that I am seeing don’t even refer to “notice”.

Given that there is a 100% liquidity requirement” for these ETFs, I would be extremely concerned about overall solvency if “bank refuses” to pay up and therefore if Market Makers were to refuse to participate.

There's actually no 100% liquidity requirement for those ETF's.

That OSFI requirement is on the banks accepting deposits from those ETF's for any part of the deposits that the ETF can contractually withdraw within the next 30 days. The ETF cannot legally withdraw any funds that are subject to, for example, a 60 day notice before 60 days.

The references to these withdrawal notification periods and pro-rata withdrawal requirements are in Appendix 1 of OSFI's October 31, 2023 letter OSFI upholds current LAR guideline treatment for HISA ETFs.