STATUTES & REGULATIONS

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Commercial Book-Entry Regulations (TRADES)

Overview

All new offerings of U.S. Treasury bills, notes, and bonds are issued only in book-entry form, which means that physical certificates are not issued.

Investors have three book-entry options for holding U.S. Treasury securities:

Legacy Treasury Direct and TreasuryDirect are systems established for investors who want to hold their Treasury securities directly with Treasury.

The commercial book-entry system is a tiered system in which an investor's ownership of securities is reflected only on the records of the institution (e.g., broker-dealer) where the investor maintains his or her securities account. The institution maintains its account at a depository institution or a Federal Reserve Bank.

Legacy Treasury Direct and TreasuryDirect Systems

Legacy Treasury Direct and TreasuryDirect are two systems for holding book-entry Treasury securities. An investor's Legacy Treasury Direct or TreasuryDirect securities account is maintained directly with the Treasury. The Treasury issues a statement of account, evidencing ownership, to the investor. Thus, unlike Treasury securities held in the commercial book-entry system, Treasury knows the identity of the ultimate holder of the securities held in Legacy Treasury Direct and TreasuryDirect systems.

For further information, please visit TreasuryDirect.

Commercial Book-Entry System

Securities held in the commercial book-entry system are maintained in the accounts of depository institutions (participant's securities account) at the various Federal Reserve Banks. These depository institutions, in turn, maintain accounts for their customers (securities intermediaries), which may include other financial institutions, broker-dealers, and individuals.

The financial institutions and broker-dealers who have accounts at these depository institutions also maintain securities accounts for individual investors (entitlement holders). An individual investor's ownership of securities is only reflected on the records of the institution where the investor maintains his or her securities account. Such an institution would maintain an account at its depository institution or Federal Reserve Bank that would include the securities accounts of other customers.

For Treasury securities held in the commercial book-entry system, the Treasury expects that settlement of any Treasury security transactions or disputes would occur between the institution maintaining the customer's account and the customer. This is because neither the Treasury nor the Federal Reserve Banks maintain ownership records for individual customers of book-entry securities held in the commercial book-entry system. Individual customers, whose Treasury securities are maintained in the commercial book-entry system, have no direct recourse against the U.S. Department of the Treasury or the Federal Reserve Bank.

As in any financial transaction, investors should exercise care in selecting a book-entry custodian or a broker-dealer.

Treasury/Reserve Automated Debt Entry System "TRADES" Regulations

Security Entitlements

Choice of Law

State Adoptions of Versions of Article 8

Government-Sponsored Enterprises

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