Tuesday, November 20, 2007
Thrift Savings Plan Restricts Day Traders
Stephen Barr, writing for the Washington Post, reports that due to increasing administration costs incurred on account of day traders jumping in and out of the TSP, the board has voted to restrict inter-fund transfers to a maximum of two per month. The policy change will be announced in February 2008 and the computers re-programmed by April.
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"For example, on Oct. 19, $371 million of the plan's assets were transferred into an international stock fund. Three business days later, on Oct. 24, $391 million was transferred out. Officials said 2,018 participants who sold their international stock on the 24th had purchased the stock on the 19th. Of that group, 323 were trading $250,000 or more. During the previous 60 days, these 323 traders had made 5,804 exchanges in the international fund worth $1.9 billion, the TSP officials said. The daily trading, and the size of the trades, have led to higher broker fees and transaction costs, especially in the international fund, where it's more difficult for the TSP's investment manager to match buy and sell orders, a study by the TSP staff found. "
Barr also reports that Tracey Ray, the Chief Investment Officer for TSP was authorised to identify the serial offenders and warn them to stop popping in and out of the system.
In other news, the markets anxiously await the Fed's new 'transparency' forecasts. And, like crack addicts, they're already clamouring for the next fix...er..rate cut. For a couple of weeks after the last rate cut, the markets were all sunshine and apple pie. Then the grumbling started, turned into whispers of more subprime losses and now there's a full blown recession panic sweeping in. Word on the street is that they'll get the fix next month and another couple of rate cuts next year. Bernanke and his gang, for the moment, see no reason to justify any rate cuts, but as soon as the going gets tough, Bernanke and his helicopter get going...
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