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Negotiable Financial Instruments > This page How Marketable Treasury Securities Really Work
How Marketable Treasury Securities Really Work It
is very important to obtain the necessary information regarding marketable
Treasury bills, notes and bonds to enable you to recognize fraudulent
schemes and phony financial instruments claiming to be marketable U.S.
Treasury securities. How Marketable Treasury Securities are Sold (more info) Treasury department (TD) sell marketable Treasury securities at public auctions on a regular schedule well known to market participants. TD announce the auctions as far in advance as practical to enable investors to prepare for the sale. Please note that securities are not issued through private placements and there are no license for financial entities or individuals to act as intermediaries to sell Marketable Treasury Securities. Treasury bills, notes and bonds, are available through banks and brokerages.
The Forms in which Marketable Treasury Securities Exist: Marketable Treasury securities exist in three forms: (1) book-entry, (2) bearer, and (3) registered. An overwhelming amount (99.84% of outstanding marketable securities) exist in book-entry form. Securities in book-entry form do not exist as printed certificates but rather as computer records on our books and on the books of banks and government securities brokers and dealers. In 1968 the first Book-entry securities became available. Since 1986, we have only issued securities in book-entry form.In addition to book-entry form, a very small percentage (.14% of outstanding marketable securities) exist in bearer form. A bearer security is a printed certificate with attached interest coupons. The name of the owner is not printed on the bearer security and no records are kept of ownership. Title to a bearer security passes on delivery. Interest and principal payments are made to the presenter of the interest coupons and certificate. In 1982 we discontinued the issuance of bearer securities. Finally, an even smaller percentage (.02% of outstanding marketable securities) exist in registered form. A registered security is a printed certificate with the name of the owner stated on the face of the security. We maintain records of ownership and issue semi-annual interest payments to the owner of record. Only the owner may submit the registered security at maturity for payment. The owner may transfer his or her registered security by completing an assignment form on the back of the certificate. We adjust our ownership records to reflect transfers. In 1986 we discontinued the issuance of registered securities. The total dollar amount of marketable Treasury securities outstanding in certificate form (i.e., registered and bearer form combined) is only approximately $5.2 billion. That accounts for only one sixth of one percent of all outstanding marketable Treasury securities!
How Marketable Book-Entry Treasury Securities are Held (more info) There are two systems in which marketable book-entry Treasury bills, notes and bonds can be hold: TRADES and Treasury Direct. TRADES, also called the commercial book-entry system, is a tiered system of ownership accounts held at securities intermediaries such as banks, brokerage firms and securities clearing organizations. Individual owners cannot be identified in this system. Ownership records are maintained by the institutions acting as securities intermediaries or custodians for investors. Holdings in TRADES amount to about 97.2 percent of the outstanding marketable debt. (more info) Treasury Direct is a system whereby investors hold their securities in accounts directly with us. It's known to us who owns securities in Treasury Direct. Holdings in Treasury Direct total about $86 billion, or 2.6 percent of the outstanding marketable debt. Recommended further
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