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$17000 - ($4000 * 20% cash margin) = $16,200. LFG should have purchased a
$15000 bill according to your instructions to roll the existing bill.
Rolling by definition is replacing a bill maturing on Thursday with a new
bill at next week's auction the following Monday. Since purchase settlement
is not delayed, you can not "roll" a bill by purchasing the replacement on
Monday before the old one matures on Thursday. Sounds to me like they went
into the open market to purchase the replacement on the day your old bill
settled. Maybe there is something I'm missing here, but these are the same
guys who, when instructed to roll over my $40k 6 month bill rolled it into a
$40k 3 month bill which naturally means twice the commissions for six months
and less interest.
Earl
-----Original Message-----
From: Scott Hoffman <trader20@xxxxxxxxxxxxxx>
To: omega-list@xxxxxxxxxx <omega-list@xxxxxxxxxx>
Cc: kevin@xxxxxxx <kevin@xxxxxxx>
Date: Saturday, February 27, 1999 11:34 AM
Subject: Rolling TBills in futures account.
>I think my broker (LFG) just cost me about $60, but before I let him know
>what I thought about it, I wanted to make sure he didn't have a case.
>
>On Monday last week, I instructed my broker to roll my $20K TBill which was
>to mature on Thu. into the biggest TBill he could. At that time, my account
>was cash debit $3K and thus had a liquidating value of $17K. ($20K TBill
>value less $3K cash debit). I expected to get rolled into a $15K TBill
since
>at maturity of the $20K TBill, my account would have $17K cash and a $15K
>TBill would cost about $14.8K. BTW, there are no options in my account and
>my margin requirement is under $4K for the futures positions I hold.
>
>On Thursday, I discovered I had been rolled into a $10K TBill. When I
>inquired, my broker responded:
>
>--------------------------
>When you ROLLED the bill, he cannot break it down in increments of $
>5,000. The minimum is $ 10,000. SO when you instructed me to roll the
>bill for as much as I could, that is what he did.
>
>However, if you just would have let the bill expire without rolling, you
>could have purchased a $15K bill the following week.
>----------------------------
>
>Does this explaination make sense to anyone? Especially you brokers out
>there. What I'm reading is that you cannot let a $20K TBill expire and buy
a
>$15K TBill *on the same day* (ie a ROLL) because it involves a $5K
>increment?
>
>This sounds like a bunch of baloney to me. But before I gave my broker a
>piece of my mind I thought I would first check with all you guys just in
>case there might actually be something to that 'no $5K increment on a TBill
>ROLL' story. And I would feel stupid ripping my broker if it was true.
>
>Thanks guys,
>
>Scott Hoffman
>Issaquah, WA
>
>
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