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Email this1:05 pm
October 27, 2013
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In reality, MMF and ISA funds are assumed to be available by the brokerage for purchase of other products such as equities, just like Cash ETFs
IF the order to sell the ISA or MMF is done before mutual fund cut off time which is typically in the order of 2pm Eastern, or perhaps a bit later with some brokerages.
I seem to recall brokerages, TDDI in particular, identified the potential problem and made the in-house TD ISA cutoff closer to 4pm. A few others IIRC have indicated 'best efforts' to make ISA funds available even if the ~2pm cutoff was missed.
Mordko is correct in saying that would not be an issue with margin accounts. At most, a day's interest might be payable.
That all said, it is a potential glitch with ISAs and MMFs that does not exist with Cash ETFs.
9:22 am
November 3, 2022
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With Q Trade, it takes a day or two to settle ISA withdrawals, depending on what time of the day the sale order is received.
Once, in the last three years, I missed the 2 pm ET cutoff on a day when I bought about $6,000 of MFC. It cost me about $3 in interest for the one day gap between the MFC purchase and the ISA settlement.
Since then, I make sure to sell ISA units the day before I make any equity purchases.
9:40 am
April 6, 2013
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Brokerage ISA's are settled T+1, just like regular stock transactions.
Scotia iTRADE has a 3:30 pm cutoff for mutual fund orders:
Orders must be submitted by 3:30 pm for current day consideration.
If you redeem or switch your mutual fund within 90 days of the purchase date, there are fees that may be relevant to you: Early Redemption Transaction fees may be charged and deducted from the settlement amount by some mutual fund companies including Scotia Mutual Funds. Please refer to the prospectus of each fund for details.
Scotia iTRADE makes the increased buying power of a brokerage ISA sale available within 20 minutes. The recognition isn't immediate. But, one does not need to wait until the next day.
9:58 am
October 27, 2013
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My main brokerage is Scotia iTrade and that 3:30pm cutoff must be relatively new (within a year or two I mean) from what was a previous 'best efforts' that late in the trading day. Not that it matters to me as I am a net seller of securities given I am in my withdrawal phase (retirement). Good news though!
5:21 am
April 6, 2013
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I don't remember when Scotia iTRADE changed it. My order records show the 3:30 pm text on mutual fund orders as far back as May 2021.
8:09 am
April 6, 2013
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Rates have been stable since previous update:
| ISA (Canadian Dollars) | Rate |
| BMO High Interest Savings Account (BMT104) | 1.95% |
| Scotiabank Investment Savings Account, Series A (DYN6000) | |
| B2B Bank HIIA, Series A (BTB100) | 1.90% |
| Equitable High Interest Savings Account, Series A (EQB1000) | |
| Home Trust High Interest Savings Account, Class A (HOM100) | |
| NBI Altamira CashPerformer Account, Series A (NBC100) | 1.80% |
| RBC Investment Savings Account, Series A (RBF2010) | |
| Renaissance High Interest Savings Account, Series A (ATL5070) | |
| TD Investment Savings Account, Series A (TDB8150) | |
| Manulife Bank Investment Savings Account (MIP510) | 1.65% |
10:22 am
January 7, 2023
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If I buy an ISA before the cut off time on a Friday, even though it is not settled until the following Monday, am I entitle to the interest earned on Friday, Saturday and Sunday?
11:47 am
October 27, 2013
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No, because you don't actually pay for it until the next business day. The brokerage transfers the funds to the ISA issuer on settlement day. Remember that the brokerage is simply the agent for the issuer, not the issuer itself.
12:16 pm
January 7, 2023
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Thanks, AltaRed.
6:46 am
April 6, 2013
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Because of the T+1 settlement, the ISA buy order would need to be entered before the cutoff on Thursday if one has funds arriving in the account Friday. That way, the ISA purchase will settle on Friday and the funds will start earning interest Friday instead of Monday.
10:38 am
October 15, 2015
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Sorry this is a long thread - I'm wondering if anyone has invested in the purpose savings fund - it's available at TD Direct Investing. It's supposed to have a net yield of 2.18% and a fee of .15%
11:13 am
April 6, 2013
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The Purpose High Interest Savings Fund is not a brokerage ISA.
It is a fund that parks money in bank deposits and treasury bills. It is more of a money market fund.
2:17 pm
October 15, 2015
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Thanks, then it wouldn't be recommended to be invested in as not as safe?
3:15 pm
October 27, 2013
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It is essentially a Cash ETF like many others with slight variations on a theme. It is not CDIC insured but the majority of its holdings are from the big 6 banks or T bills. That is pretty darn close to the ultimate in safety.
I would not hesitate to own it or any one of numerous money market mutual funds.
It is not unlike whether you sleep on a mattress on a frame raised from the floor or sleep on the mattress on the floor.
3:58 pm
January 7, 2023
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Norman1 said
Because of the T+1 settlement, the ISA buy order would need to be entered before the cutoff on Thursday if one has funds arriving in the account Friday. That way, the ISA purchase will settle on Friday and the funds will start earning interest Friday instead of Monday.
Thanks, Norman1, this is a good tip.
I supposed when I sell the ISA on Friday before the cutoff, I get to keep the interest from Friday to Sunday. Is that correct?
5:03 pm
October 27, 2013
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It is the same in reverse. A sale on Friday does not settle until Monday when the cash then becomes available. By definition, interest accrues through the weekend.
It is not complicated. Settlement day (T+1) is driving factor.
10:18 am
November 3, 2022
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AltaRed said
It is the same in reverse. A sale on Friday does not settle until Monday when the cash then becomes available. By definition, interest accrues through the weekend.It is not complicated. Settlement day (T+1) is driving factor.
So the moral of this story is to sell ISA units on a Friday, when possible, to pick up the weekend's interest and buy ISA units Monday to Thursday, to start earning interest sooner, rather than later.
11:49 am
October 27, 2013
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Yes, that is a good summary.
I don't care much about missing out on Sat or Sun lack of interest. It's about $5.34 per day before tax based on $100k @ 1.95%. That is a basic Starbucks offering. Buy when one has the money to buy and sell when one needs the money for something else.
Example: I got a stock dividend yesterday that was not posted until this morning May 1st in my BMOIL account. I will simply buy units BMO95142 today knowing full well it won't Settle until Monday afternoon. I have far too many other priorities to expend my time that wringing my hands about that.
