45-day hold time - Treasury Direct

[kmiklas]

Seems there as a 45-day hold time before securities purchased via Treasury Direct can be transferred to a broker and marketed.

Is this true? Is there any way around this (outside of rolling maturities into a new bond).

45 days is a looooong time... 1080 hours...64,800 minutes... 3,888,000 seconds... 3,888,000,000 milliseconds...

Thanks, Keith

 

[tiddlywinks]

Seems there as a 45-day hold time before securities purchased via Treasury Direct can be transferred to a broker and marketed.

Is this true?

Yes, it's true. Nice thing is it's calendar days, not business days.

https://treasurydirect.gov/marketable-securities/buying-a-marketable-security/

When you buy through TreasuryDirect, you must hold new Treasury marketable securities for at least 45 calendar days before transferring or selling them. This holding period does not apply when your new security is bought with proceeds from a reinvestment of a maturing security.

 

[GoldDigger]

Forty-five days is not that long.

Just work on some project like writing
a book or something that you have been
putting off, and those days will fly by.

Trust me.

 

[kmiklas]

When you buy through TreasuryDirect, you must hold new Treasury marketable securities for at least 45 calendar days before transferring or selling them. This holding period does not apply when your new security is bought with proceeds from a reinvestment of a maturing security.

Hmm... if I were to buy a 4-week bill maturing in 28 days, and roll it into a new purchase, can I then transfer it out immediately and cut the time down by around 15-17 days?

Example: on May 1st acquire a 4-week bill, which matures on May 28th, and roll that into another auction on the 29th, and then transfer to my brokerage on the 30th?

 

[BMK]

can I then transfer it out immediately and cut the time down by around 15-17 days?

Based on the quote you posted, that would probably work.

But what is your goal? You're going to transfer it to a retail brokerage account, and then what?

Sell it?

Sounds like a lot of work to avoid a commission when you buy it. Better check to see if your broker charges a fee to transfer it in. That fee could negate any savings on the commission when you buy it.

I have only bought treasury securities in our Schwab account a couple times, and I don't remember what we paid in commissions. But it wasn't much. And when I experiment by entering an order right now, it looks like the commission is zero.

Treasury Direct is designed for investors who plan to hold to maturity. It's not going to be a friendly place if you are trying to trade bonds, i.e., profit from interest rate movements.

 

[BMK]

We bought $5K in notes in February and the commission was zero

This was secondary market, not a new issue. But according to the Schwab website, the commission is also zero on new issue Treasuries

 

[monkeyc]

We bought $5K in notes in February and the commission was zero

This was secondary market, not a new issue. But according to the Schwab website, the commission is also zero on new issue Treasuries

View attachment 318008

You didn't truly get zero commissions. The commissions were built into the transaction price.

 

[BMK]

The commissions were built into the transaction price.

Agreed. There is a cost to the retail customer that is embedded in the bid/ask spread.

And I suppose that cost can be avoided if you buy new issue securities through Treasury Direct.

But you can't sell treasury securities through Treasury Direct. The OP was talking about buying direct and then transferring the bonds to a brokerage account.

There is no way to avoid a commission, or retail bid/ask, when selling.

 

[kmiklas]

I was thinking of buying Treasury issues, moving them to my brokerage, and reselling them for a small profit. Basically brokering them. I thought perhaps I could make a risk-free dollar or two.

Not as easy as I'd thought. In addition to a 45-day hold time, moving issues out of treasurydirect.com requires a signed form 5511 with _medallion stamp_, snail-mailed, with month-long delays.

Furthermore, the price is at the midpoint of the bid-ask spread, and profits would be in the single-basis point range. Perhaps if I had USD10M or more... but for a $100k bond I'd make about $10 for all my trouble. I'd probably spend that in gas going back and forth to the bank for the stamp.

https://www.treasurydirect.gov/forms/pdf5511.pdf

 

[TimtheEnchanter]

I got my money (ibonds) out when they dropped from 9 percent to 6 percent. But you must hold them for a year. I figured QYLD, RYLD, XYLD, and DJIA are all nice dividends, albeit not as stable as treasuries. I put 61k in UNITED STATES TREAS BILLS ZERO CPN 0.00000% 09/28/2023

For some odd reason, I cannot buy any in my wife's retirement account, even in brokerage direct.