It is the reason, the primary transfer method is through the DTC electronically using the Transfer for Withdrawal service, but because this is non DTC the brokers cannot use that service. So they have to do a manual transfer between brokers, they want cash on hand to cover settlement, Etrade is making the customer hand over cash to cover the settlement. Now he should find out if he gets his cash back after the shares settle in his account, but either way that is a ridiculous amount of cash to hand over for T+3 days until settlement is complete.
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