Does it really have to take 2-3 days to electronically transfer money in 2011?

Posted by Skinz on June 24, 2011 (09:09AM)

Morning!  Here's a question from a brand new member..

I have been testing out several brokerages lately looking to move from my current brokerage to a new home for trading.  I'm excited to try out TK's trading platform, I think it has a lot ot offer.  (Especially the online community- I love this idea.)

I've noticed that every online brokerage I've tried seems to have the same basic process for transferring funds via ACH.  

1) Verify the checking account. (2-3 days)
2) Transfer funds (2-3 days)

And here, there's even a 3rd step.  Hold the inital transfer for an additional 2-3 days.  So I signed up Wednesday, and I'll be able to finally make a trade a week from this Monday, if I'm lucky.

Then, once it's all set up, each ACH transfer still requires 2-3 days until you can see/use the funds.

I'm no banker, but I just don't get it- If it's all electronically done, what is so involved in these steps that actually requires 2-3 days?   Especially once the link is established..?   If a gas station can execute a checking account debit in less than a minute, why does a brokerage take up to 3 days?

I've always wondered this- And now finally there are people to ask!  Thanks for any insight, and have a great morning.


Posted by doougle on June 24, 2011 (09:22AM)

And, while we're at it...
Why does a stock sale tale 3 days to settle?  Options settle over night.

Posted by TK Frisbee Guy on June 24, 2011 (11:47AM)


I'd be glad to clarify some of the background thinking concerning the policy; it's root is in risk management. In terms of time frame, and initial ACH setup and the initial funding of an account should take total, about 5-6 business days. Please note this is two initial factors - the set up of the link and the FIRST funding of an account. The 2-3 days for ACH setup is simply processing time on the back end. When we receive documents, we need to route and store them securely in our systems, and Operations reviews bank ownership (from the voided check or bank statement) as well as identity (via the ID) for regulatory and fraud prevention purposes. They always seek to process links as quickly as volume allows for, and can often do this in 2 days, but we do see influxes up to the 3.

An ACH deposit, if made after 9am, should post to the account within an hour, and often within minutes. This can be done as soon as a link is approved, at which time, the ACH deposit section changes from the pending view to the normal ACH deposit screen. When ACH deposits are requested overnight, they're processed the following business morning. As for the hold time to trade, I recently clarified some confusion on our policy for this here.

Our ACH clearing policy is parallel to our policy for trading on personal checks. We do this, because like a check- ACH is not guaranteed funds. We do allow for wires and cashier's checks (with the account holder listed as Remitter on the check), which are guaranteed methods of transfer, and can not bounce like and ACH or peronal check. The way ACH, or the Automated Clearing House works: Financial instititions are able to debit or send funds to one another's accounts. So, when you request a deposit through a link on our site, we refresh that information online, and send a debit to your bank. Then, just like clearing a check, they can potentially come back over the next few days and request return of the debit, for reasons of insufficient funds, or any other reason specified by the bank.

We appreciate the interest in trading quickly, and this is why for many trades once an account is funded with previously deposited and cleared equity, the website will allow you to trade right through the 3 business day hold (which always displays), according to the previous cleared account value. If the deposit is for less than your cleared account value, we can secure the deposit against equity in the account thats already clear to let you trade, but if the deposit exceeded your account value, it would need to be held. Cases in which you would likely NOT be able to use the funds are for the purchase of penny stocks, certain options, or other volatile stocks, but if you ever wish to place a trade on uncleared funds, there's no cost to give us a call at 877-495-5464 and a broker will gladly review the trade and can place it according to their discretion.


I hear you, but the stock settlement is according to SEC regulation. It actually used to be T + 5 business days! They rolled it down to 3 several years back. I've linked an SEC explanation with some of the history involved here. One thing to bear in mind is that frequency of trading now-a-days is according to the type of account you have, and the level of funding.

Cash accounts are limited to T + 3 trading, using their settled funds once per day. Margin accounts require an agreement and minimum margin eligible equity of $2,000, but allow for more frequent trading. When you have a margin account between 2 and 25k in equity, the concern is not getting yourself coded as a pattern daytrader. (Another regulation, which can be very limiting if the account is right at the 25k line or under it frequently in terms or margin eligible equity).

In margin accounts, you can daytrade 3 times in a 5 rolling business day period. A daytrade is the opening and then closing of a position intraday. So buying THEN selling, or selling short THEN buying to cover. A 5 rolling business day period is such that you would include the previous 4 business days when looking at the period. So, on a Monday, you would be counting back to and including the previous Tuesday in a normal week with no holidays. You can read up on Margin here, and pattern daytrading here, and if interested can apply for Margin online under Services > Settings > Margin/Options trading level.

Best as always,

Rocco Sabino
Trading and Customer Support

Posted by E-Man on June 24, 2011 (10:01PM)

While we are at it:  Why does TK only allow $10k per day for ACH deposits/withdrawals?  At Think or Swim (now TD Ameritrade) you can transfer $50k per day.

Posted by TK Frisbee Guy on June 25, 2011 (05:31PM)


This would be another example of risk management, since ACHs are not guaranteed funds. We actually did raise the limit to $15,000 daily, which you can transfer up to at this time. While I can't speak to other firm's policies, TradeKing does employ conservative transfer policies as part of our regulatory AML program and procedures. We also maintain the ability to accept and send wires for clients looking to move larger amounts into or out of TradeKing.

Best regards,

Rocco Sabino
Trading and Customer Support  

Posted by E-Man on June 26, 2011 (11:46PM)

Thanks for the info Rocco.  $15k is moving in the right direction.  I would have thought the ACH was the best way for TK to get money quickly and secure.  I learned something new today.

Now I feel guilty that I opened my account with a cheque I received from a king in Nigeria  :)


Posted by wackzingo on February 14, 2012 (02:52AM)

I understand the reason for the delay's between verifying an account and funds clearing. But, the requirements to send a government ID and a voided check is ridiculous. I have opened credit cards and setup automatic payments, opened accounts at almost every other discount broker and even non-discount brokers and have never had to send a voided check in the past 6-10 years. They simply make a small deposit of a few cents into my account then ask me to input how much each deposit was into a form and it's verified within 2 days and I can immediately transfer funds which are then available within 2-3 days. Not so here, I have to submit an ID and a voided check (I don't even own any checks anymore). This added work is not worth it for me just to save a few dollars on commissions. Maybe I'll try you again TradeKing when you come into the 21st century. How sad to end before I even got to use you.

Posted by treeHamster on February 14, 2012 (03:24AM)

Wack, I never had to send in a voided check. I know because I've NEVER used checks in my life. I also don't have bank statements (not paper ones anyway) and never sent one of those. When I signed up I just had to send in my drivers license and SS card (copies anyway) and then filled in the stuff for the ACH. Took about a week and all my stuff was up. So I'm not exactly sure what you are referring to.

Posted by wackzingo on February 14, 2012 (04:07AM)

 How about this from they ACH page:

If you have not submitted the additional requested documents (Photo IDs and Voided check) please do so now. There are three ways to send the documents. 1) Use your cell phone or camera to take a digital picture of your information and email it to us

 No thanks, I'll stick with my current brokers.

Posted by Buster01 on February 14, 2012 (08:40AM)

Wack, I sent a text message of my ID and a voided check, that's all they needed.  Talk about 21st century.  Like Tree, I have no idea what you are talking about. And I'm sure you called you could just give them your routing/bank number (which you need for a ACH).

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