Category Archives: InvestorLine

Do I Have to Pay a Commission if My Order to Sell Stock or Buy Stock Doesn’t Get Filled?

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When I was new to online investing in my self-directed brokerage account at BMO InvestorLine, one of my first “newbie” questions was: “If I put in an order to buy a stock at a certain price and no one sells it to me, do I still have to pay the fee?” I could see myself spending my entire investment account on fees for unfilled orders.

Written: 2012
Reviewed: 2023
Revised: 2023

So I asked BMO  by email how the fee works.

They reassured me that no, if the sale does not go through, I don’t have to pay the fee.

Phew.

Also, if I put in an order to sell a stock at a certain price, and no one wanted to buy it, I also would not have to pay a fee.

Partial Fills of Trades Can Result in Fees

There is one exception, though. If you put in a request to buy or sell a stock and they buy or sell part, but not all, of it then you will get charged a fee.

For example, say you want to buy 500 shares of BCE at $40. Someone may offer to sell 200 shares of BCE to you at that price. That will result in a “partial fill” of your order.

If no one else sells you the other 300 shares before the close of trade that day, you will get charged the full commission, which is $9.95 for my BMO InvestorLine account in 2023.

You get charged the $9.95 even though you still want 300 more shares. And if you put in another order the next day for the other 300 shares, if it fills you will be charged another $9.95!

I guess that’s why they call this “playing” in the market. You might have to pay a fee or two you don’t expect. Whether you have to or not is a game of chance.

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Have you ever got zinged with a fee you didn’t expect because of a partial fill? Or did they get you some other way? Please share your experiences with a comment.

When Can I Buy a GIC or Mutual Fund After I Sell a Stock in my BMO InvestorLine Self-Directed Account?

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In 2023, when you sell a stock in a self-directed brokerage account, such as a BMO InvestorLine account, the actual settlement date is 2 full trading days later, which is abbreviated as T+2 for transaction date plus 2 business days. So, for example, if I sold a stock on a Thursday, and Friday and Monday are normal trading days, the settlement will take place on Monday. So when can you buy a GIC or a mutual fund after you sell a stock in your InvestorLine account?

Note: When this was written in 2012 settlement occurred 3 trading days after the purchase or sale order was filled, which was called T+3. And now, in 2023, the USA regulators are already at work trying to shorten the settlement date to T + 1, the date of the transaction when the order was filled, plus one business trading day, starting in the fall of 2024. Please confirm settlement dates with your brokerage!

Written: 2012
Reviewed: 2023
Revised: 2023

What is the Settlement Date?

Settlement is when my broker hands over the share certificates (admittedly electronically nowadays) and the other broker hands over the enormous sum of cash to pay for my shares. It dates back to the days of paper certificates which had to be physically moved from a secure location to the buyer.

So If I Want to Buy a GIC, How Long Do I Have to Wait After Selling a Stock?

When I sold some shares on a Thursday in 2012, to my surprise, the sale value showed up immediately in my “cash” listing with BMO InvestorLine. Being a suspicious sort, I emailed BMO and asked when I could actually use that money to buy a GIC.

BMO replied that I have to wait until at least Monday, 2 full business days after the trade because in 2012 trades settled in T + 3 business days.

The GIC purchase order would go in overnight to take place on Tuesday, and the settlement of my stock sale would also take place over that same night, so the cash would be in my account on Tuesday to pay for the GIC.

GICs, as you can see, settle one full business day after the purchase order is placed. Stock sales settled 3 full business days after the purchase or sale order is placed in 2012. Because these deadlines don’t line up, you have to be careful.

Now, in 2023, with a settlement date of T + 2, if I sold a stock on Thursday, I could place an order to buy a GIC on Friday, and both the purchase and sales would close on Monday.

Being a naturally cautious person, I think I would wait till the settlement date to place a GIC order. Although if there was a super-incredible rate available, I guess I might test the system and place the order on the day before settlement, as suggested.

If I Want to Buy a Mutual Fund, How Long Do I Have to Wait After Selling a Stock?

Presumably, the BMO answer would be the same for a mutual fund. In 2023, with T+2 settlement, the order could be placed on the first full business day after the sale of the stock, since it would not be effective until the second business day after the sale. Again, as an ultra-conservative investor, I would likely wait till the trade had settled before placing the order.

If I Want to Buy Another Stock, How Long Do I Have to Wait After Selling the First Stock?

Stocks are easier. For either a purchase or a sale of a stock in 2023 the settlement date is the trading date plus 2 trading days. So if you sold a stock and then bought another different stock later that same day, it would work, because the settlement dates would be the same day.

The settlement dates would also be the same if we do migrate to T+1 in the future.

The Moral of the Story: Watch Out for Differing Settlement Dates!
I have a sneaking suspicion that these self-directed brokerage accounts have been set up so that they will not let you buy or sell unless your settlement dates line up. But I guess if you have the option (little financial pun there, catch it?!) to spend money you don’t have in your account (I believe that’s called working on “margin”) then it might let you put through a purchase when you don’t have the funds available yet from your sale. So make sure you know your dates will line up, and as the Sergeant used to say on Hill Street Blues “Be careful out there.”

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Have you ever ended up buying something with money you didn’t have in your self-directed brokerage account? Did it turn out Happily Ever After, or did you get burned with an unexpected fee? Please share your experiences with a comment.