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Cash Substitutes
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Cash Substitutes in Trading and Rebalances Cash Substitutes at the Account Level |
Cash substitutes are position-traded securities that Tamarac Trading treats as cash for monitoring and allocation purposes. However, unlike cash, these cash substitutes will actually create a trade when sold.
For example, a new client currently holds $10,000 in a position-traded money market fund, in addition to holding sweep cash, and you want to treat the money market fund like cash, not like a security. To do this, you create a cash substitute in the client's account. Tamarac Trading then treats the client's holdings in the money market fund as cash.
During a rebalance, Tamarac Trading will treat a cash substitute as cash. If a client needs to raise cash to meet a reserve, Tamarac Trading will recommend sells in order to increase cash needs. If a client has cash to invest, Tamarac Trading will recommend buys, using rank to determine which cash substitutes to use.
During a rebalance, sweep cash is used before generating trades to sell cash substitutes.
In addition, Tamarac Trading uses these rules when using cash substitutes:
ModelsCash substitutes cannot be included in models
Unmanaged assetsCash substitutes cannot be treated as unmanaged assets.
Directed tradesCash substitutes cannot be used for directed trades.
Other security substitutesCash substitutes created at the global level cannot be security substitutes for any other security.
You can create a cash substitute in individual accounts or at the global level, across all accounts.
Cash substitutes at the account level will override any global cash substitutes.
To set up cash substitutes at the account level, follow these steps:
On the Accounts menu, select Accounts.
Click the account where you want to add a cash substitute.
In the Rebalancing tab, select Cash Management.
Under Cash Substitutes, select Add. This creates a blank row.
Type the ticker of the security you want to designate as a cash substitute in Search securities. When you see the security in the list, select it.
Type your rank for the cash substitute in Rank.
If Tamarac Trading needs to generate cash during a rebalance, the cash substitute securities will be sold in order of rank, with 0 being the highest sell priority. The $$$ ticker must be ranked 0.
Select Add to add additional cash substitutes, if desired. You can add as many as you'd like.
When done, select Save.
To set up cash substitutes that apply to any account at your firm, follow these steps:
On the Setup menu, select Securities.
Type $$$ in Search securities and press Enter.
Click the description to open the security's settings.
Under the Rebalancing tab, select Substitutes.
Select +. 
.
Type the ticker of the security you want to designate as a cash substitute in Search securities. When you see the security in the list, click it.
Type your rank for the cash substitute in Rank and your target allocation under Target.
If Tamarac Trading needs to generate cash during a rebalance, the cash substitute securities will be sold in order of rank, with 0 being the highest sell priority. The $$$ ticker must be ranked 0.
Click + to add additional cash substitutes, if desired. You can add as many as you'd like.
Click Save.
Cash substitutes follow some settings and restrictions while ignoring others. The following is a summary of how cash substitutes interact with settings and restrictions:
Tamarac Trading adheres to the following settings when using cash substitutes:
Global security restrictions.
Tamarac Trading ignores the following settings when using cash substitutes:
Account-level minimum holding sizes.
Account-level maximum gain amounts.
Account-level minimum trade sizes.
Allow Violation of the Wash Sale Rule setting at the account level.
The following definitions may help you differentiate various cash reserves columns and fields you see in Tamarac Trading: