Here is my understanding of this.This thread is interesting, but here is another question...Yes, I mis-interpreted the thread stream context for your reply. Mea culpa. As noted above, the treasury MMF can be used to keep the risk level consistent with an FDIC-insured account, at least with the non-CMA account, and maybe with the CMA account per a post above.
Setting aside the risk of a MMF breaking the buck, isn't there also a risk that the brokerage is relying on other "banks" to carry out the movement of money? For example, since Fidelity isn't a bank, it's relying on UMB/BNY/PNC/etc. to handle ACH transfers and wires and debit transactions.
Who would be responsible if there was a problem?
I'd like to think Fidelity is much more responsible than Synapse and other startup Fintechs, but it should be a legitimate concern. Is the added yield of these CMA type accounts or MMFs worth the added risk?
Online billpay is an outsourced service by what probably is the vast majority of banking institutions. When you schedule a payment from your account to a payee, the bill pay provider initiates the ACH transaction from your bank account to the payee, or if they cut to mail to the payee, the ACH is from your account to the billpay provider.
ACH transactions have Reg E protection, and the transaction initiator (not the payer) has responsibility for it.
Statistics: Posted by Northern Flicker — Sat Aug 03, 2024 2:20 pm — Replies 69 — Views 6208