Marketable Treasury Securities - how they are sold, types, and types of booking or holding

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We realize that some of our site visitors are interested in real investments and not collectibles. We have listed a little information types of treasury securities and how they are sold, held, and traded

This page is dedicated to explaining how marketable US Treasury securities are sold and held.

How Marketable Securities Work
To understand the fraudulent schemes and phony financial instruments involving what are claimed to be marketable U.S. Treasury securities, it's important for you to learn more about marketable U.S. Treasury bills, notes, and bonds.

How Securities are Sold
Marketable Treasury securities are sold at public auctions on a regular auction schedule well known to market participants. We announce the auctions far in advance to allow investors to prepare for the sale. The US government does not issue securities through private placements, nor do they license financial entities or individuals to act as intermediaries to sell marketable Treasury securities. Although the US Treasury doesn't designate financial institutions to sell Treasury bills, notes, and bonds, they are available through banks and brokerages.

Types of Treasury Securities
Marketable US Treasury securities exist in three forms:

Book-Entry: An overwhelming majority (over 99%) exist in book-entry form. Securities in book-entry form exist not as printed certificates but as computer records on Treasury books and on the books of banks and government securities brokers and dealers. Book-entry securities first became available in 1968. Since 1986, the US Treasury has issued marketable securities in book-entry form only.

Bearer: A small percentage (less than 1%) exist in bearer form. A bearer security is a printed certificate with interest coupons attached. A bearer security does not contain the name of the owner and the Treasury doesn't keep records of ownership. Title to a bearer security passes on delivery. The US Treasury makes interest and principal payments to the presenter of the interest coupons and certificate. The US government discontinued the issuance of bearer securities in 1982.

Registered: Less than 1% 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. The US Treasury maintains records of ownership and issue semiannual interest payments to the owner of record. Only the owner may submit the registered security at maturity for payment. The owner can transfer his or her registered security by filling out an assignment form on the back of the certificate. The US government has discontinued the issuance of registered securities since 1986.

How Book-Entry Securities Are Held
There are three systems in which investors can hold marketable book-entry Treasury bills, notes, and bonds:

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. The institutions acting as securities intermediaries or custodians for investors maintain ownership records. Holdings in TRADES amount to about 97.2 percent of the outstanding marketable debt.

Legacy Treasury Direct and TreasuryDirect are two other systems for holding book-entry Treasury securities. The Treasury issues a statement of account, evidencing ownership, to the investor. So, unlike Treasury securities held in the commercial book-entry system, we know the identity of the ultimate holder of the Treasury securities held in Legacy Treasury Direct and TreasuryDirect systems.

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