Funding an account with a T-Bill.

Discussion in 'Trading' started by Il Principe, Oct 10, 2006.

  1. JayS


    Hint: Make sure your FCM buys the t-bills in your name not theirs.
    #11     Oct 11, 2006
  2. 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
    #12     Oct 11, 2006
  3. 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.
    #13     Oct 12, 2006
  4. Nattdog


    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.
    #14     Oct 12, 2006
  5. 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:
    #15     Oct 14, 2006
  6. 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.


    #16     Jun 26, 2007
  7. WinDiff


    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)..."

    "...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

    #17     Jun 26, 2007
  8. 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.

    #18     Dec 1, 2007
  9. anyone knows which brokers allow this?

    and specifically, does openecry offer this option?

    thx in advance
    #19     Dec 2, 2007
  10. dabao91


    IB requires a minimum of $1 million for T-bills!!!

    WHY $1m, why not lower than that just like some other FCM/broker?
    #20     Dec 2, 2007