Fidelity Removes All Money Market Sweeps Except FCASH from Non-retirement Accounts

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by DrBlaBlason

Full text on the announcement at the bottom of this post. For me, this was a big attraction to Fidelity for new accounts. Although I will be a legacy and able to continue sweeping to SPAXX, it’s a shame to know that future account holders won’t receive that benefit of auto sweeping to a ~5.00% yielding money market. I also wonder what, if anything, this signals about Fidelity and would love to hear some thoughts.

Starting on December 15, 2023, FCASH will be the only available core cash transaction account option for all new non-retirement brokerage accounts. FCASH is an interest-bearing free credit balance that offers a competitive rate, is highly liquid, and is protected by SIPC.* Current non-retirement brokerage accounts that use an option other than FCASH as its core cash transaction account may continue to do so. However, all new accounts (including new accounts established for an existing customer) must use FCASH. Core cash transaction account changes for existing non-retirement accounts will be limited to FCASH starting on March 15, 2024.

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FCASH provides: • Liquidity–FCASH is highly liquid and payable on demand to support funding your customers’ investments and meeting their current needs. • Competitive Interest Rate–FCASH offers a competitive interest rate of 2.26% as of September 20, 2023, which is currently 1.55% above the industry average of 0.71%.** • Protection–The SIPC will cover up to $500,000 in securities, including $250,000 limit for cash held in a brokerage account (including FCASH). Fidelity also provides protection through excess of SIPC coverage.*** As part of these changes, effective December 15, 2023, the applicable fee schedule(s) your firm has in effect with Fidelity will be amended to reflect that FCASH is the core transaction account option for new non-retirement brokerage accounts. We will continue to provide further details about this change and the fee schedule amendment via Important Notices. Your customers’ December statements will include a message regarding this change. Please reach out with any questions.

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