Fidelity Auto Roll Question

[RetiredAndLovingIt]

I got a notification today that my account does not have the funds to settle recent trades and I have a negative balance. Needless to say I panicked but it looks to me like maybe it's an auto roll issue. I have a treasury marked as autoroll maturing on 11/28 that will cover the negative balance for the purchase in question that I'm pretty sure I never made 2 days ago.
Is it normal to get that kind of notice or have I somehow screwed and overbought? I didn't think I could make a purchase if I didn't have the funds available.

 

[COcheesehead]

Unless you have margin.
Fidelity has a hierarchy for liquidating holdings to settle balances. So unless you want them to make the decision as to where the funds will come from, you should sell something.

 

[RetiredAndLovingIt]

Unless you have margin.
Fidelity has a hierarchy for liquidating holdings to settle balances. So unless you want them to make the decision as to where the funds will come from, you should sell something.

The letter threatens that if they don't have payment by 11/30 so I'll be on the phone to them first thing Monday morning. To the best of my knowledge I have not signed up for margin, I don't ever want the ability to buy something I don't have the cash to pay for.

 

[COcheesehead]

If I buy more than what I have in core, they pull from my money market. I also have margin if I go beyond that.
If the letter is threatening, there is likely more going on than explained here.

 

[audreyh1]

Yes call.

I thought autoroll pretty much used the proceeds of the maturing treasury to pay for the new one which settles the same day.

But I’ve always had enough to cover the order in other MM funds even if not in my core account, so I’ve never seen a warning.

 

[frayne]

Unless you have margin.
Fidelity has a hierarchy for liquidating holdings to settle balances. So unless you want them to make the decision as to where the funds will come from, you should sell something.

+1 but as you mentioned, call them Monday morning and get it sorted out.

 

[Golden sunsets]

I haven't gone through an auto roll yet, but anticipate doing so on a monthly basis starting in January. I noticed that the auction dates for 2024 (for the 52 week autoroll) that I bought back in early 2023 are uniformly a couple of days before the maturing date of the existing issue I own. I didn't understand how this was going to work( unless I carry cash in the amount of the roll consistently), so I called about a month ago to inquire. I didn't get a definitive answer. I figured I would either be overdrawn (on margin) for a couple of days, have to carry cash in the account constantly, or have to wait till the next monthly 52 week bill was issued. None of these options seemed like a good idea, so it has been my plan as I get closer to January to call, get a conclusive answer and then likely cancel all of my autorolls and select the new treasury purchases manually as the existing issues mature. The auto roll does not appear to work, for me at any rate.

A further note: If one wants a 12 month auto roll ladder, one really needs 13 purchases per year, as there are thirteen 52 week auctions each year. And one would need an extra amount to hold in SPAXX or FZDXX in order to address the mismatch on maturing dates vs auction dates to make this work properly. So one would need funds to basically cover 14 bond par values.

 

[COcheesehead]

Here is how Fidelity auto roll works.
https://www.fidelity.com/fixed-income-bonds/fixed-income-tools-services/auto-roll-program

I have margin on my account. It doesn’t cost anything to enroll. I don’t use it, but it is peace of mind for things like this and it’s a replacement for an emergency fund. I can write a check today for 7 figures if I needed to.

 

[audreyh1]

I noticed that the auction dates for 2024 (for the 52 week autoroll) that I bought back in early 2023 are uniformly a couple of days before the maturing date of the existing issue I own. I didn't understand how this was going to work….

The auction date is not the settlement date. The issue date is, which is a few days later. The maturing treasury returns money the same day the new auction settles.

I should add that I show negative balance in my core account between auction and issue/settlement date but that’s not a problem because it’s all straightened out on the settlement day when the old treasury matures.

It is true that I also don’t mix these investment accounts with other “spending” accounts as suggested by the link below.

 

[Morgan22]

This is a known issue with Fidelity. If you go over to Bogleheads.org you'll see its been discussed in multiple threads.
Just one example.
https://www.bogleheads.org/forum/viewtopic.php?t=407358

Many people have a separate brokerage account for their treasuries on auto roll. Otherwise you can run into a problem with not being able to make other types of purchases or have debits hit your account during the few days the auto roll is occurring if you don't have enough in a MM to cover these other transactions.

 

[RetiredAndLovingIt]

UPDATE
The Fixed Income Specialist assured me it is an auto roll issue and when my t-bill matures tomorrow everything will go back to normal. I was under the understanding that the new purchase and maturing bill would settle at the same time so I had no funds available for them to debit to cover the few days between the two transactions. I cancelled all my other auto pays for now.