"Why do you want to cancel?" - Vanguard

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fast_and_curious
Posts: 89
Joined: Fri May 16, 2014 12:07 pm

"Why do you want to cancel?" - Vanguard

Post by fast_and_curious »

So I made what in the grand scheme of things is a small mistake, but the response from Vanguard was surprising. Curious if I'm missing something.

I did my 2019 taxes on Saturday morning, and ended up owing a few thousand dollars. Since most of the reason for the extra taxes was from my Vanguard 1099-DIV, I wanted to sell a few thousand dollars worth of a Vanguard fund to pay the taxes. This happens some years, since I - probably mistakenly - don't track things close enough throughout the year to make sure I add extra withholding or pay estimated taxes.

Anyway, seems like an eternity ago, but on Friday the market did reasonably well (for the last few weeks), and things seemed much more in control than they do today. So I placed an online order Saturday morning to sell a bit of a Vanguard equity fund.

Of course, later Saturday and especially Sunday was just more and more bad news; by Monday morning, equity futures had hit the "limit" in the down direction.

Since this was a mutual fund order that wouldn't even go through until Monday afternoon, I called Vanguard 8:00am Monday morning to cancel the order (and was planning to sell out of a fixed income fund instead). I THINK I have, maybe once or twice, cancelled a Fidelity mutual fund order online well in advance of the close of market, without any issues, but the Vanguard site doesn't allow you to cancel online.

Anyway, when I talked to the agent, to my surprise, he asked, "WHY do you want to cancel?", and said he'd have to ask his supervisor for permission to cancel the order, given my reason. Taken aback, I just told the truth (that the market seemed poised to tank Monday given the bad news that came out after my order). After about 10 minutes, the agent came back and said, "nope, can't cancel".

First of all, I admit this is completely my fault - my fault that I owed the taxes and my fault that I chose to place an order Saturday morning (knowing it wouldn't execute until Monday afternoon) in these volatile times.

But (1) I am surprised that Vanguard did not allow me to cancel the order before the market even opened - again, I believe I have done this in the past with Fidelity, although of course I haven't done it more than once or twice, so I could be wrong about the details. And (2) I was REALLY surprised I was asked for a REASON for the cancellation - the implication was that if my reason was sufficient, maybe they'd have let me cancel. I guess I should have thought of a really good reason (wonder what would have qualified) instead of the truth!

Anyway, just thought this was an odd set of events, and curious if anyone has any additional insight (such as whether it's true that other brokerages let you cancel mutual fund orders, and if the reason-for-cancellation really affects whether or not it's allowed)?
informal guide
Posts: 351
Joined: Mon Aug 29, 2016 10:26 am

Re: "Why do you want to cancel?" - Vanguard

Post by informal guide »

Is your account a brokerage account or a mutual fund account? If I remember correctly, one may cancel a brokerage order but may not cancel a mutual fund order. I even vaguely remember verbiage on this on the confirmation screens and Representative telephone conversations.

Historically, Vanguard was more strict on this than Fidelity, as cancelled orders impact the fund manager trying to invest just the fund's daily cash flows and Vanguard thought that cancelling was to the detriment of long term buy and hold investors.
OnTrack2020
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Joined: Mon Mar 20, 2017 10:24 am

Re: "Why do you want to cancel?" - Vanguard

Post by OnTrack2020 »

I don't know about Fidelity, but I'm almost certain that with Vanguard, once you place that order to sell either mutual funds or money market, that on the screen, before hitting the button, it says something to the effect that once the order is placed, it can't be cancelled.
Thesaints
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Joined: Tue Jun 20, 2017 12:25 am

Re: "Why do you want to cancel?" - Vanguard

Post by Thesaints »

Next time try blaming your fat finger, that entered one zero too many.
dbr
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Re: "Why do you want to cancel?" - Vanguard

Post by dbr »

I think it is a point that entering orders at the beginning of a weekend is probably a bad idea. The cut off time for equity mutual funds is 3:00pm, so you are only exposed to one hour of end of day trading without being able to see how the market is going for that day. You won't see a NAV value for the fund until it is priced, but you can be aware of how the market is trending.
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SpringMan
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Re: "Why do you want to cancel?" - Vanguard

Post by SpringMan »

dbr wrote: Wed Mar 18, 2020 5:47 pm I think it is a point that entering orders at the beginning of a weekend is probably a bad idea. The cut off time for equity mutual funds is 3:00pm, so you are only exposed to one hour of end of day trading without being able to see how the market is going for that day. You won't see a NAV value for the fund until it is priced, but you can be aware of how the market is trending.
Agree it is a bad idea. The cutoff time can depend on the firm managing the account or 401(k)s. I am able to submit fund buy orders at Vanguard (VBS) up to just prior to 4:00 PM eastern and they go through the same day.

Fidelity does allow cancellation prior to execution of the order. In general Vanguard does not for mutual funds. No problem cancelling ETF or stock trade orders prior to execution at either company.
Best Wishes, SpringMan
Mako
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Location: MD

Re: "Why do you want to cancel?" - Vanguard

Post by Mako »

dbr wrote: Wed Mar 18, 2020 5:47 pm I think it is a point that entering orders at the beginning of a weekend is probably a bad idea. The cut off time for equity mutual funds is 3:00pm, so you are only exposed to one hour of end of day trading without being able to see how the market is going for that day. You won't see a NAV value for the fund until it is priced, but you can be aware of how the market is trending.
Yeah, we had just had what, a loss of 12% Thursday then a gain of 10% Friday? In such an insanely volatile market no way would I want to be stuck at the mercy of world events for 2+ days. I don’t even like making mutual fund trades in the morning during regular times.

As to the OP, I’m not surprised that they didn’t permit cancellation, but I am surprised they asked for a reason, implying it was possible. I figured it’d be a blanket no, no matter what.
MotoTrojan
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Re: "Why do you want to cancel?" - Vanguard

Post by MotoTrojan »

SpringMan wrote: Thu Mar 19, 2020 6:48 am
dbr wrote: Wed Mar 18, 2020 5:47 pm I think it is a point that entering orders at the beginning of a weekend is probably a bad idea. The cut off time for equity mutual funds is 3:00pm, so you are only exposed to one hour of end of day trading without being able to see how the market is going for that day. You won't see a NAV value for the fund until it is priced, but you can be aware of how the market is trending.
Agree it is a bad idea. The cutoff time can depend on the firm managing the account or 401(k)s. I am able to submit fund buy orders at Vanguard (VBS) up to just prior to 4:00 PM eastern and they go through the same day.

Fidelity does allow cancellation prior to execution of the order. In general Vanguard does not for mutual funds. No problem cancelling ETF or stock trade orders prior to execution at either company.
While the cutoff time to enter the order is 3:59.59 PM EST, they are not required to take your order just because you got it in before close.
sixty40
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Re: "Why do you want to cancel?" - Vanguard

Post by sixty40 »

When I first opened my Vanguard mutual fund acct, I wanted to familiarize myself with the buy and sell orders for mutual funds. I would submit small buy and sell trades in weekends and after hours, and would cancel them w/o any issues, all on their website. I also cancelled mutual fund orders during trading hours prior to close, which also was not a problem. Maybe things have changed, or maybe it is the current conditions we are in. Maybe the size of the trade matters.
MotoTrojan
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Re: "Why do you want to cancel?" - Vanguard

Post by MotoTrojan »

sixty40 wrote: Thu Mar 19, 2020 7:27 am When I first opened my Vanguard mutual fund acct, I wanted to familiarize myself with the buy and sell orders for mutual funds. I would submit small buy and sell trades in weekends and after hours, and would cancel them w/o any issues, all on their website. I also cancelled mutual fund orders during trading hours prior to close, which also was not a problem. Maybe things have changed, or maybe it is the current conditions we are in. Maybe the size of the trade matters.
Brokerage vs. mutual fund account I would imagine.
inbox788
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Re: "Why do you want to cancel?" - Vanguard

Post by inbox788 »

fast_and_curious wrote: Wed Mar 18, 2020 4:09 pmBut (1) I am surprised that Vanguard did not allow me to cancel the order before the market even opened - again, I believe I have done this in the past with Fidelity, although of course I haven't done it more than once or twice, so I could be wrong about the details. And (2) I was REALLY surprised I was asked for a REASON for the cancellation - the implication was that if my reason was sufficient, maybe they'd have let me cancel. I guess I should have thought of a really good reason (wonder what would have qualified) instead of the truth!
Did you check out the policy and terms and conditions on cancelling orders? I'm surprised they weren't able to cancel the order despite whatever volatility was present over weekend and that day given that the order hadn't executed yet and there was a long time to try to do so.

If not for the taxes, margins and commissions and fees, you could ADD a reverse order to effectively cancel your action. If the market moved that much, you might consider those costs (say an IRA account) the cancellation fee. And today with free trades that goes down too. Or are there rules against being on both sides of the trade and effectively buying what you're selling? If that was a problem, you could try using TLH pairs to maintain your equity position.
After the trade: Changing your mind
You can cancel a trade online through the Order status link or by calling us.

We'll do our best to meet your request but can't guarantee that a given trade can be changed or canceled, especially during volatile markets.

Understand the ups & downs of trading during volatile markets
https://investor.vanguard.com/investing ... ack-orders
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