Treasury Direct

AAA

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.

INVESTOPEDIA EXPLAINS '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. 

Find out how your tax refund can go directly towards the purchase of Treasury Direct securities; check out What are the benefits of splitting my tax refund?

RELATED TERMS
  1. Federal Reserve Bank

    The central bank of the United States and the most powerful financial ...
  2. Dealer Market

    A financial market mechanism wherein multiple dealers post prices ...
  3. Note Auction

    A formal bidding process that is scheduled on a regular basis ...
  4. Auction Market

    A market in which buyers enter competitive bids and sellers enter ...
  5. Treasury Bill - T-Bill

    A short-term debt obligation backed by the U.S. government with ...
  6. U.S. Treasury

    Created in 1798, the United States Department of the Treasury ...
Related Articles
  1. Economics

    The Federal Reserve

    Few organizations can move the market like the Federal Reserve. As an investor, it's important to understand exactly what the Fed does and how it influences the economy.
  2. Bonds & Fixed Income

    Basics Of Federal Bond Issues

    Treasuries are considered the safest investments, but they should still be analyzed when issued.
  3. Investing

    The Advantages Of Bonds

    Bonds contribute an element of stability to almost any portfolio and offer a safe and conservative investment.
  4. Active Trading

    Buy Treasuries Directly From The Fed

    If you want government securities, go straight to the source. We'll show you how.
  5. Investing

    Where can I buy government bonds?

    The type of bond determines where you can purchase it, so you need to decide which type of bond you would like to purchase first.Bonds are debt obligations. Federal bonds are issued by the federal ...
  6. Bonds & Fixed Income

    How does face value differ from the price of a bond?

    Discover how bonds are traded as investment securities and understand the various terms used in bond trading, including par value, market price and yield.
  7. Bonds & Fixed Income

    Why is my bond worth less than face value?

    Find out how bonds can be issued or traded for less than their listed face values, and learn what causes bond prices to fluctuate in the secondary market.
  8. Trading Strategies

    How long will it take for a savings bond to reach its face value?

    Learn essential information about U.S. savings bonds along with an explanation of the unique characteristics of this popular investment instrument.
  9. Bonds & Fixed Income

    When are treasury bills best to use in a portfolio?

    Understand the role that U.S. Treasury bills can play in an investment portfolio and why they represent one of the most liquid and secure debt obligations.
  10. Bonds & Fixed Income

    How are treasury bills taxed?

    Read about how the Internal Revenue Service collects taxes on treasury bills purchased from the United States government through Form 1099-INT.

You May Also Like

Hot Definitions
  1. Command Economy

    A system where the government, rather than the free market, determines what goods should be produced, how much should be ...
  2. Prospectus

    A formal legal document, which is required by and filed with the Securities and Exchange Commission, that provides details ...
  3. Treasury Bond - T-Bond

    A marketable, fixed-interest U.S. government debt security with a maturity of more than 10 years. Treasury bonds make interest ...
  4. Weight Of Ice, Snow Or Sleet Insurance

    Financial protection against damage caused to property by winter weather specifically, damage caused if a roof caves in because ...
  5. Weather Insurance

    A type of protection against a financial loss that may be incurred because of rain, snow, storms, wind, fog, undesirable ...
  6. Portfolio Turnover

    A measure of how frequently assets within a fund are bought and sold by the managers. Portfolio turnover is calculated by ...
Trading Center