Likely due to this Free-Riding Violations: Free-riding violations happen when an investor sells a security that was purchased using unsettled funds and uses the proceeds from that sale to purchase another security before the original purchase has settled. This practice essentially relies on the proceeds from a sale that has not yet settled to make a new purchase. To avoid free-riding violations, investors should wait until the funds from the original sale have settled before using them for a new purchase.
Well, the good news is T-1 settlements are coming soon to Canada as well. Though then we'll be arguing why we can't have T-0 settlements, and then real-time settlements. Though I see a lot of more nasty exploits and big problems with those when/if they do happen.
Is not this case, and FYI: even with unsettled cash you can open a new trade, but you may not close it on the same day. As said, this all did not occur in my case.
Whoops. Sorry. I was thinking too much on my flux-capacitor and my parked DeLorean outside... I'm just glad I didn't buy STOCK in the company during the early 80s.
Did you also read the fidelity example? It reads: "[...] she had sufficient settled funds to pay for the purchase of XYZ stock at the time of the purchase." As said, only sales generate unsettled cash. And the initial 500 is normal settled cash, b/c otherwise one would mention that it's unsettled cash.