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Treasury Bills


Discussion in Treasury Notes and Bonds

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Treasury Bills

  #1 (permalink)
London
 
 
Posts: 4 since Dec 2014
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Treasury Bills

What is the best way to buy Treasury Bills and get them into my brokarage account (I am with IB but I guess question is similar for other brokers)? I would like to use them as margin for futures positions. I would have thought that the most economic way is to buy them at the auctions but how can I then get them into my brokarage account? Or is there a way to somehow participate in the auction and get the T-Bills straight into my brokarage accounts? I looked at the secondary market as well but it looks very illiquid with a big bid-offer.

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  #3 (permalink)
Madison, NJ
 
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as an individual, the only way to participate in t bill auction directly is set up an account with treasurydirect.gov, and the only option for you is noncompetitive bid (competitive bid is for institutions). with a noncompetitive bid, you agree to accept the high rate, yield, or discount margin set at auction. there's also a limit of $5 million per bid per auction. at the close of an auction, treasury awards all noncompetitive bids that comply with the auction rules.

once you receives you t bills, you can transfer them from treasurydirect to the commercial book-entry system. in the commercial system, you own the securities through a broker or bank.

in treasurydirect, under "manage direct," choose the appropriate option for making a transfer and supply the requested information. you'll be asked for the routing number and name of the financial institution to which you're making the transfer.

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  #4 (permalink)
London
 
 
Posts: 4 since Dec 2014
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Thank you for the helpful reply.

Do you (or others) think that buying at the auctions is worth the hassle of transferring cash and T-bills back and forth, as opposed to just buying them on the secondary market with my broker? I know it is a general question and I can imagine it depends on several factors, but even a rough quatification of the difference would be helpful. Like I mentioned above I am not looking to trade in T-Bills just want to use them as margin for Futures.

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  #5 (permalink)
Madison, NJ
 
Experience: Intermediate
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if you really wanted to use t bills as margins, you best choice is to discuss with your broker.

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  #6 (permalink)
London
 
 
Posts: 4 since Dec 2014
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Not sure what you mean, my broker is fine with me using T-Bills as margin, I was just wondering what the best way is for me to purchase them. Don't think IB are the type to advise me on that.

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  #7 (permalink)
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Did you read here first?
https://www.interactivebrokers.com/en/software/tws/usersguidebook/getstarted/trade_bonds.htm

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  #8 (permalink)
London
 
 
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That link just tells you how to input orders for Treasuries on TWS which is pretty trivial. My problem is not how to input orders on TWS for T-Bill but I am more concerned about the bid-offer spreads I see. Say, Jun 25 2015 T-Bill shows right now 99.948/99.962 which is over 0.2 bid-offer which seems huge. Then if I look at historical charts on TWS then there is one trade every few hours which is far from the liquidity I was expecting for T-Bills. Why is that?

I have no clue about T-Bills trading/investing and I don't want to become an expert at it, I just want to buy them at a reasonable price and without a lot of hassle and use them as margin for Futures. Anyone can suggest some way to that please? Or at least where I can learn more about that?

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