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Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail

TreasuryDirect

What it is:

TreasuryDirect is the website used by the U.S. Treasury Department to sell Treasury securities directly to investors.

How it works (Example):

TreasuryDirect is the first and only financial services website that lets investors purchase and redeem securities (like U.S. government bonds) directly from the U.S. Department of the Treasury in paperless electronic form. The TreasuryDirect system is run by the U.S. Treasury's Bureau of the Public Debt.

The U.S. Department of the Treasury issues bonds (T-bonds), bills (T-bills) and notes using a Dutch auction system in which it grants the best prices to competitive bidders. This process was computerized with the introduction of the Treasury Auction Automated Processing System (TAAPS) in 1993. TreasuryDirect carried this move one step further, providing a virtual "open desk" through which large and small investors could electronically place bids for and obtain Treasury securities.

Why it Matters:

Similar to stocks and corporate bonds, Treasury securities were traditionally available only by way of a broker-dealer. TreasuryDirect removes the proverbial "middle man" and allows investors to purchase Treasury securities without incurring brokerage commissions.

[InvestingAnswers Feature: Using TreasuryDirect to Buy U.S. Government Bonds]