Fidelity cash management withdrawal
Summary of User’s Concern and Solutions Discussed:
- The main problem reported by the user is uncertainty about whether a check written against their Cash Management Account (CMA) would bounce due to insufficient funds in the core position, given that some funds are in a less liquid position (FUMBX).
- It was noted that typically, a check will only draw from the core position, and if funds are insufficient there, the check may bounce.
- There might be an option in the account settings to change how funds are drawn, but it’s unclear if this applies to checks or just electronic fund transfers; contacting Fidelity Support for clarification is recommended.
- For a check to clear, the user would need to sell shares of FUMBX to settle in the core position, as securities do not auto-liquidate to cover check amounts.
- Fidelity may cover debit balances by first using funds in the core position, followed by eligible secondary money market funds, which may auto-liquidate under certain conditions.
Here’s the full thread
I have a question about how this account would work with a less liquid position in the event of a withdrawal.
For example if my CMA has some of its positions in say FUMBX and some in core (QPCTQ) and I write a check out for XXXX dollers.
Will the check bounce due to insufficient funds in core , because Fumbx would have to be sold first, cleared by settlement then allowed to be withdrawn?
The default is the check will bounce because it will only draw from core. However, there is an option in settings I believe to change this. I’m not 100% sure it will work for a check though. My memory is that setting is for ECF transfers, not checks. I’d contact Fidelity Support and ask for confirmation. Not something you want to leave to chance when you might bounce a check.
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Thanks for reaching out, @Genkidin – (งツ)ว When writing a check against a Cash Management Account (CMA), you typically need to have the amount available in the core position for it to clear. In the scenario you mention, you would need to sell Fidelity Short-Term Treasury Bond Index Fund (FUMBX) shares to settle in the core to fund the written check. The security will not auto-liquidate.
Fidelity attempts to cover debit balances created in your account—whether through trades, direct debits, etc.—by first using funds in your core position. If the core is depleted, the system will turn to any eligible secondary money market fund to cover the transaction. In these cases, the money market fund will automatically be liquidated, but not all non-core money markets are eligible for automatic liquidation.
Just to let you know, not all secondary money markets are eligible for automatic liquidation to cover purchases. Fortunately, you can determine whether a money market will auto-liquidate using the requirements below:
• Fidelity Investments Money Market (FIMM), non-FIMM government, retail prime, and retail municipal funds
• Maintains a stable net asset value
• A liquidity fee has not been imposed
Please let us know if you have additional questions. We’ll be happy to help! 🟢
Great TY. This sums it up well.
You are most welcome, @Genkidin – (งツ)ว. We’ll be around, so please reach out as needed. 🟢