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In the commercial book-entry system, you'll maintain your relationship with your financial institution, broker, or dealer and potentially pay fees for their services. The commercial book-entry system allows you to easily buy and sell securities as well as, unlike Legacy Treasury Direct, use them for collateral. You can also hold Treasury securities in stripped form, known as STRIPS or zero-coupon Treasuries, in the commercial book-entry system.  

What are STRIPS or zero-coupon Treasuries?  

STRIPS, also known as zero-coupon securities, are Treasury securities that don't make periodic interest payments. Market participants create STRIPS by separating the interest and principal parts of a Treasury note, bond, or TIPS. For example, a 10-year Treasury note consists of 20 interest payments -- one every six months for 10 years -- and a principal payment payable at maturity. When this security is "stripped," each of the 20 interest payments and the principal payment become separate securities and can be held and transferred separately. STRIPS can only be bought and sold through a financial institution, broker, or dealer and held in the commercial book-entry system.  

 

 

How can I sell my Treasury security before maturity?  

If you hold your security in the commercial book-entry system, contact your financial institution, government securities dealer, broker, or investment advisor. Normally there is a fee for this service. If you hold your security in TreasuryDirect or Legacy Treasury Direct, you can transfer it to an account in the commercial book-entry system or let us sell your security through our Sell Direct program for a modest fee.  

 

How do I receive my interest and principal payments in each system?  

In the TreasuryDirect and Legacy Treasury Direct, Treasury makes interest and principal payments directly to the financial account you choose. In the commercial book-entry system, Treasury's interest and principal payments may flow through several institutions on their way to you. For example, a payment could go from the Federal Reserve to a large bank to a smaller bank to your bank or broker before it gets to you.  

What happens when my security matures?  

When your security matures, we pay you the principal and the final interest payment through TreasuryDirect, Legacy Treasury Direct, or the commercial book-entry system. Rather than take payment of the principal, customers of TreasuryDirect and Legacy Treasury Direct can choose to roll the principal into another security. In TreasuryDirect you do this by scheduling a repeat purchase. In Legacy Treasury Direct, you do it by scheduling a reinvestment. Legacy Treasury Direct allows you to reinvest any securities except TIPS, and to schedule reinvestments by mail, phone, or over the Internet.  

How can I get more information about Treasury securities?  

You can get information about Treasury securities on our website or your financial institution, broker, or dealer. If you're interested in Legacy Treasury Direct, ask for our Investor Kit (PD P 009).  

Online Investing 

 

What You Need to Know About Trading
In Fast-Moving Markets
 

The price of some stocks, especially recent "hot" IPOs and high tech stocks, can soar and drop suddenly. In these fast markets when many investors want to trade at the same time and prices change quickly, delays can develop across the board. Executions and confirmations slow down, while reports of prices lag behind actual prices. In these markets, investors can suffer unexpected losses very quickly.  

Investors trading over the Internet or online, who are used to instant access to their accounts and near instantaneous executions of their trades, especially need to understand how they can protect themselves in fast-moving markets.  

You can limit your losses in fast-moving markets if you  

  • know what you are buying and the risks of your investment; and  
  • know how trading changes during fast markets and take additional steps to guard against the typical problems investors face in these markets.  

 

Online trading is quick and easy, online investing takes time 

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