DEFINITION of 'Treasury Direct'
The online market through which investors can purchase federal government securities directly from the U.S. Treasury. Treasury Direct sells Treasury bills, notes, bonds, Treasury inflation-protected securities (TIPS) and savings bonds, all of which are backed by the full faith and credit of the U.S. government and are used to finance the federal debt.
BREAKING DOWN 'Treasury Direct'
The online Treasury Direct trading system eliminates banks, brokers and dealers as middlemen, saving investors money on commissions and fees. Investors can still purchase Treasury securities through these traditional channels if they wish.
Treasury securities are sold through an auction process, and this process establishes a security’s rate and yield. Investors can place either competitive or non-competitive bids. Competitive bidders specify the rate, yield or discount margin the investor will accept; non-competitive bidders agree to accept the rate, yield or discount margin that the auction establishes. At the auction’s close, the Treasury first issues securities to all non-competitive bidders, then to competitive bidders from lowest to highest bid, until it has issued the total amount of securities provided for by that auction. All accepted bidders receive the terms of the highest accepted offer. The minimum required investment in the Treasury Direct market is $100.
The online Treasury Direct system is the main way the U.S. Treasury sells its securities. To open a Treasury Direct account, investors must have a Social Security number or taxpayer identification number, a U.S. address, a checking or savings account for transferring funds to and from a Treasury Direct account, an email address and a secure Web browser and Internet connection. Individuals, institutions, corporations, partnerships, limited liability companies, sole proprietors, estates and trusts can also have Treasury Direct accounts.