What YOU can do to fight back - IFT limit

[DrFaustus]

I would be in favor of that. But, to be honest, I think this is a done deal.

 

[sugarandspice]

Who would be in favor of removing the I fund from TSP investment since it seems to be causing the "problem." In exchange we keep the current system of IFT's.

 

[ayla]

I really liked this response by Dave (Dave are you on this board? if so, great job!) at http://www.fedsmith.com/article/comment/1431/start/28/


Its All About Freedom
Service Rep
Social Security Admin
Mon Nov 26, 2007 1:33 PM


Your column was excellent and timely, and I would bet that you are right about the rules saving TSP participants from themselves.
But that's how freedom gets whittled away year after year. Other people think they know what's best for other people - and sometimes they do. But that's no excuse to take their freedom away and make choices for them.
Freedom is defined by having choices. The more choices, the more freedom. Less choices - less freedom.

True freedom is the freedom to be stupid. You can teach us, as you are doing very well, but in the end, we must make the choice - or we are not free.

Dave E.

 

[Show-me]

I have read the FRTIB minutes and the Fund Performance reports. I found that the Fund that Ms. Ray quotes in her report, the I Fund, had the highest "trading cost" month in August a very volatile month for everyone. The second highest "trading month" was February also a "flight to safety period" for the equities. The last week of February and the first week of March were volatile and the F funds highest month of "trading cost" was March.

That shows me that it is much more than just the 3000 causing higher "trading cost" during months of volatility.

I would like to know the total number of participant that made interfund transfers the month of August.

I would also like to know what portion of the L funds are in the "trading cost".

I find the report incomplete because it does not report the total number of interfund transfers per month by all participants and the exact impact of the L Fund re-balancing per month.

 

[FundSurfer]

...in my re-read of the memo, I could not help but think that this problem (rising cost)would have happened anyway due to the increase in participation in the tsp--frequent trading or not....

EXACTY! The biggest +/- "market impact" occurs when there are big market moves. Those are days when a lot of people move their money.

Tracey Ray points out the current I fund agreement with Barclays is to provide next day settlement of up to $40 million. Any amt over that could take up to three days. It seems to me that a new contract or company should be considered since Barclays is taking advantage of that clause.(Holding the $ while benefiting from it). What do you think?

I think the contract will be renegotiated, but that will take time. It is a very lucrative contract. For the amount of money we are talking about, we ought to beable to get Barclays to determine price at 8 am instead of 5 pm.

 

[FundSurfer]

Fundsurfer -

In case you're not aware, if you are mailing your memo using regular postal mail, you need to know there is a major post office logjam in Washington D.C. because of the filtering for threatening letters (and anthrax if I remember correctly or whatever that chemical is that is a major health risk)

I know for a fact that it takes about a month for a letter to get thru for congressmen according to the receptionist I spoke with for Senator Kay Hutchison.

Most senators/congressmen have a means on their website for you to send them 10000 characters in an email message. I'm not sure about the ETAC committee members. Good luck.

The content of your memo sounds very good to me. Thanks for sharing that.

I also very much liked the suggestion from "anonymous" about "no taxation without representation" that Tom posted about. I hope something comes from it.
--A

I sent this to the ETAC members, so hopefully it will not get delayed. I've e-mailed my congressmen but don't expect this to get anywhere with congress. Our only hope there is that a staff member that looks at the e-mail takes an interest.

 

[nnuut]

Like, Catch 22! They see it's catching on and they want to Nip it in the Bud!:worried: When they should be changing the system.

 

[DrFaustus]

Something just occured to me.

The TSP has 3,500,000 members. The TSP Board wants to implement a drastic reduction in the number of trades allowed by each member because 3000 of its members are actively engaged in managing their retirement accounts.

Now, 3000 is less than 1/10 of 1 percent of 3,500,000. What is the TSP Board going to do if, God forbid, 1 percent of its members begin to actively manage their accounts?

There is something seriously wrong here.

 

[James48843]

We're now over 425 signatures on the petition, but we need a LOT more. Spread the word at work on Monday, and let's pump that baby up.

Sign it here:

http://tspshareholder.org

Sign the petition!

Thanks

 

[airlift]

Good to see you back!

Been gone for a bit, and was shocked by the TSP proposal to limit trades this way. I have sent my emails and made the phone calls. Have you?

For those interested, will post regarding my recent mission to Ukraine soon.

Good to be home

 

[airlift]

I just signed the petition. Great idea!

Re: 12%ayear's Account Talk
Spread the word. I am lobbying very hard and calling everyday. Remember it is your hard earned money and future on the line. I hope they charge a small fee so they will not gripe again in the future.
__________________
http://www.tspshareholder.org/ spread the word
__________________
http://www.tspshareholder.org/

 

[12%ayear]

Spread the word. I am lobbying very hard and calling everyday. Remember it is your hard earned money and future on the line. I hope they charge a small fee so they will not gripe again in the future.

 

[ayla]

Fundsurfer -

In case you're not aware, if you are mailing your memo using regular postal mail, you need to know there is a major post office logjam in Washington D.C. because of the filtering for threatening letters (and anthrax if I remember correctly or whatever that chemical is that is a major health risk)

I know for a fact that it takes about a month for a letter to get thru for congressmen according to the receptionist I spoke with for Senator Kay Hutchison.

Most senators/congressmen have a means on their website for you to send them 10000 characters in an email message. I'm not sure about the ETAC committee members. Good luck.

The content of your memo sounds very good to me. Thanks for sharing that.

I also very much liked the suggestion from "anonymous" about "no taxation without representation" that Tom posted about. I hope something comes from it.
--A

I'm changing my tactics somewhat and suggest others do the same.

If you have viewed the Frequent Trading memo that Tracey Ray sent to the FRTIB Director, you will know that they have already addressed many of our arguements against making changes. Tracey Ray has done a very good job of laying out the problem. She will certainly beable to convince those who do not understand what is going on very well that she has documented a problem.

I have decided to concentrate on convincing ETAC members that yes something needs to be done but that trading limits is not the answer. The problem is with the "Market Impact" aspect of the I-fund. This impact caused by OSM being closed when closing prices for the day are set. (We all understand this to be the FV problem.) I am embracing James' suggestion to move the time that closing prices are determined from end of day 5 pm to 8 am the next morning. In this manner we will be able to address the major cost associated with trading cost but still allow members flexibility to trade more than twice a month.

Those of you who are making the L-fund arguement have already had that concern addressed in the memo. You can argue that cost have not gone up, they will be very convincing to the contrary. The best solution is to give an alternative that will achieve reduced cost and preserve trading flexibility.

We can't stick our head in the sand and convince them there is really not problem. We'll loose since we will not be able to counter their arguements in person. I think that we actually were getting too good at timing the FV. Several people were getting very good at making good FV decisions. Over time the FV should even out but that is a very hard concept to get across in a 5 minute phone conversation or couple paragraph letter.

My letter is as follows:

Dear *****,

Recently the Federal Retirement Thrift Investment Board (FRTIB) voted to limit TSP interfund transfers to 2 trades per month. I am not at all happy with the new policy that the FRTIB is proposing to implement. The reason given by the board is to reduce cost of frequent traders who drive up cost of trading associated with the I-fund. This cost of trading is not actually the cost of buying and selling stock, but rather cost associated with international markets being closed when daily fund prices are set and fund managers having to guess at the opening prices of international stocks for the following day. If the guess is off, any +/- amount has to be made up as trading cost or market impact. Recent market volatility has made this occur on a regular basis over the last several months and several bad guesses in a row and we have a large trading cost bill. Over time this +/- should even out. The limit on number of trades is totally unacceptable because the real reason for increased cost is the managers of the funds inability to guess the Fair Valuation of the I-fund correctly. That is what is really driving the cost up. A better solution would be to post the fund closing prices the next morning after overseas markets have opened. This would eliminate the major cost identified by FRTIB and yet preserve trading flexibility for members.The board thinks that the cost is associated with “3000” frequent traders. In February, many more than 3000 people jammed the TSP phone lines moving their money as a reaction to a market drop. That day there was a big FV that turned out to be a bad guess. 3000 people don’t jam phone banks set up for tens of thousands of people. Market volatility will be when even the infrequent trader (right or wrong) will request an interfund transfer. Limiting trades to 2 trades per month will NOT solve this problem.I hope that as a member of the Employee Thrift Advisory Board you will protect the freedom to have "no limit on the number of contribution allocation or interfund transfer requests that may be made by a participant" as per Title 5 Chapter VI Part 1601 Subpart D Sec. 1601.32.b.Title 5 Chapter VI Part 1601 Sec 1601.22 states that I "may make an interfund transfer using the TSP Web site or the ThriftLine". Punishing a individual for making more than two transfers by making them only use the mail would seem to be against the CFR.

There should be another solution to the frequent trader problem other than limiting the number of monthly trades that everyone can make.

Thank you for your time.

Sincerely,



*******

 

[tsptalk]

I'm passing along these comments I received from "Anonymous".

The TSP lobby needs a specific goal in order to
succeed long term, like "putting a man on the moon by
the end of this decade" (Kennedy), or "read my lips,
no new taxes" (Bush I). Only a dynamic new vision will
catalyze massive support among government employees
for a major change in the TSP Board.

The problem is "no taxation without representation".
The fees, and their management, are the "tax". The
"without represenation" is that no governement
employees are on the TSP Board as full members with
voting rights, full access to all financial
information and a yearly salary as board members.

I suggest that the TSP Lobby's politically oriented
visionary dyanmic goal be to enact legislation to have
three elected government employees on the TSP Board as
full members.

From the TSP Lobby site, the three groups represented
are Union, Non-union and online investors (market
timers) who are also government employees. So at the
beginning of each U.S. Presidential term, three
government employees, one from each group, is voted on
using the governement's TSP web site, where the "one
vote, one person" rule can be electronically enforced.


TSP Board government employee candidates would put up
their own web site. Two months before the Presidential
election, the TSP site would list, in random order,
links to the candidates web sites (by category). All
TSP participants have access to the web. So all voting
can be done via the web.

"No taxation without representation". That is the
ticket to success for the new TSP Lobby, in my
opinion.

Just a suggestion.

 

[wv-girl]

I'm changing my tactics somewhat and suggest others do the same.

If you have viewed the Frequent Trading memo that Tracey Ray sent to the FRTIB Director, you will know that they have already addressed many of our arguements against making changes. Tracey Ray has done a very good job of laying out the problem. She will certainly beable to convince those who do not understand what is going on very well that she has documented a problem.

I have decided to concentrate on convincing ETAC members that yes something needs to be done but that trading limits is not the answer. The problem is with the "Market Impact" aspect of the I-fund. This impact caused by OSM being closed when closing prices for the day are set. (We all understand this to be the FV problem.) I am embracing James' suggestion to move the time that closing prices are determined from end of day 5 pm to 8 am the next morning. In this manner we will be able to address the major cost associated with trading cost but still allow members flexibility to trade more than twice a month.

Those of you who are making the L-fund arguement have already had that concern addressed in the memo. You can argue that cost have not gone up, they will be very convincing to the contrary. The best solution is to give an alternative that will achieve reduced cost and preserve trading flexibility.

We can't stick our head in the sand and convince them there is really not problem. We'll loose since we will not be able to counter their arguements in person. I think that we actually were getting too good at timing the FV. Several people were getting very good at making good FV decisions. Over time the FV should even out but that is a very hard concept to get across in a 5 minute phone conversation or couple paragraph letter.

My letter is as follows:

Dear *****,

Recently the Federal Retirement Thrift Investment Board (FRTIB) voted to limit TSP interfund transfers to 2 trades per month. I am not at all happy with the new policy that the FRTIB is proposing to implement. The reason given by the board is to reduce cost of frequent traders who drive up cost of trading associated with the I-fund. This cost of trading is not actually the cost of buying and selling stock, but rather cost associated with international markets being closed when daily fund prices are set and fund managers having to guess at the opening prices of international stocks for the following day. If the guess is off, any +/- amount has to be made up as trading cost or market impact. Recent market volatility has made this occur on a regular basis over the last several months and several bad guesses in a row and we have a large trading cost bill. Over time this +/- should even out. The limit on number of trades is totally unacceptable because the real reason for increased cost is the managers of the funds inability to guess the Fair Valuation of the I-fund correctly. That is what is really driving the cost up. A better solution would be to post the fund closing prices the next morning after overseas markets have opened. This would eliminate the major cost identified by FRTIB and yet preserve trading flexibility for members.The board thinks that the cost is associated with “3000” frequent traders. In February, many more than 3000 people jammed the TSP phone lines moving their money as a reaction to a market drop. That day there was a big FV that turned out to be a bad guess. 3000 people don’t jam phone banks set up for tens of thousands of people. Market volatility will be when even the infrequent trader (right or wrong) will request an interfund transfer. Limiting trades to 2 trades per month will NOT solve this problem.I hope that as a member of the Employee Thrift Advisory Board you will protect the freedom to have "no limit on the number of contribution allocation or interfund transfer requests that may be made by a participant" as per Title 5 Chapter VI Part 1601 Subpart D Sec. 1601.32.b.Title 5 Chapter VI Part 1601 Sec 1601.22 states that I "may make an interfund transfer using the TSP Web site or the ThriftLine". Punishing a individual for making more than two transfers by making them only use the mail would seem to be against the CFR.

There should be another solution to the frequent trader problem other than limiting the number of monthly trades that everyone can make.

Thank you for your time.

Sincerely,



*******

Good response. But in my re-read of the memo, I could not help but think that this problem (rising cost)would have happened anyway due to the increase in participation in the tsp--frequent trading or not. Tracey Ray points out the current I fund agreement with Barclays is to provide next day settlement of up to $40 million. Any amt over that could take up to three days. It seems to me that a new contract or company should be considered since Barclays is taking advantage of that clause.(Holding the $ while benefiting from it). What do you think?

 

[wv-girl]

Speaking of opinions, has everyone voted on the petition yet?
http://www.thepetitionsite.com/1/reverse-the-decision-to-limit-tsp-interfund-transfers
Last look there were 300.

 

[ayla]

Totally apathetic political person that I am (though I do have opinions, I rarely do anything to advance their cause), I made the call also and left a message on their answering machine. Very simple and easy thanks to the info you have provided. Thanks.

 

[Viva_La_Migra]

I made the call today. I just got a voicemail and left a brief, but decsriptive message.

Thanks for posting the contacts!

I left a voicemail as well.

 

[tsptalk]

Todays email:
Our first ETAC member we'd like you to contact is:

Federally Employed Women
Sharon Roydes, Treasurer
1666 K Street, N.W. Suite 440
Washington, DC 20006

Phone: (202) 898-0994

Give her a call, and tell her you are opposed to limits on TSP trades. Tell her what a two trade limit would mean to you. Keep it short, but to the point. Then ASK her to vote no on the two-trade limit.

I made the call today. I just got a voicemail and left a brief, but decsriptive message.

Thanks for posting the contacts!

 

[Rod]

I met with Congressman Cliff Stearns (R, Florida)representative yesterday and discussed the current situation regarding TSP. She is a TSP contributor also and was unaware of the most recent events. She expressed that she plans to discuss it with Congressman Stearns and right the wrong that is being planned.

Jimmy

Thank you for bringing it to her attention!