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I am being told some disturbing things about availability of a T-bill in a
brokerage account. I'd appreciate some info from anyone on this list who is
knowledgeable about this subject.
I'm told that "ACAT " is an automated system for handling fund transfers and
reflects a policy jointly adopted by most (all?) brokerages. In accordance
with this policy/system, a T-bill held in one's account is completely
unavailable for a period of X days prior to maturity, where X is reported
variously as 10 days up to 30 days.
Alternatively, I've been told that the hold is due, not to ACAT, but to an
SEC-imposed requirement related to the procedure by which matured T-bills
are redeemed.
But whatever the cause, the story is that for a period of X days prior to
maturity one cannot transfer the T-bill to a different brokerage or even
sell it - it's in limbo. I asked what would happen if the T-bill were being
used as margin for a futures contract and a drawdown necessitated selling
the bill to satisfy the margin call. The "operations manager" to whom I was
speaking did not know the answer but tried to snow me with a lot of
circumlocution and BS.
A careful re-reading of my Client Agreement and various disclosure documents
failed to turn up any mention of this availability-of-funds issue. Can
anyone give me the correct explanation of this matter?
(a) Is it true that a T-bill is absolutely and completely inaccessible for X
days before maturity?
(b) If so, what is the value of X?
(c) What WOULD happen in the event of a margin call?
(d) Is this simply a policy which has been voluntarily adopted by
brokerages, or is it actually mandated by law?
(e) How do brokerages justify such a restriction on availability of funds
without prior disclosure of this policy?
(f) What do the letters "ACAT" stand for?
Thanks for your input.
Carroll Slemaker
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