Fidelity.com Help - Trading Bonds/Fixed Income Securities (2024)

Fixed income investments generally provide a return in the form of fixed periodic payments. At maturity, fixed income investments return the principal. On Fidelity.com, you can buy and sell secondary market fixed income securities such as bonds, or participate in new issue fixed income offerings.

About Bond/Fixed Income Trades

• What fixed income security trades can I make on Fidelity.com?
• When can I enter orders for secondary fixed income securities on Fidelity.com?
• Can I enter orders for Municipal Resets on Fidelity.com?
• Am I eligible to trade fixed income securities on margin?

Placing Bond/Fixed Income Trades

• How do I specify the fixed income security that I want to trade?
• How do I enter a quantity for a trade?
• What order types are available for fixed income trades?
• What is a Request for Bid Quote?
• What is the yield on a fixed income security?
• How do I enter a limit price or limit yield for a bond order?
• Are limit orders guaranteed?
• What limitations and restrictions can I place on fixed income orders?
• Am I guaranteed an allocation of new issue securities?
• Will I have the opportunity to change or void a trade before executing it?
• When is my order submitted to Fidelity?

Confirmations and Cancellations

• What trade verification and confirmation do I receive online?
• How can I cancel, or cancel and replace, a pending fixed income order?

Related Help Topics

ABOUT BOND/FIXED INCOME TRADES

What fixed income security trades can I make on Fidelity.com?

You can:

• Buy or sell secondary market fixed income offerings.
• Buy new issue fixed income offerings.

You can submit buy orders for New Issue Treasury, CD, GSE/Agency, and CorporateNotes^sm inventory. You can also submit an indication of interest to purchase new issue municipal bonds. See Participating in and Viewing New Issue Offerings for details.

When can I enter orders for secondary fixed income securities on Fidelity.com?

You can enter orders during the standard market session.

Can I enter orders for Municipal Resets on Fidelity.com?

No. Municipal Reset Buy, Sell and Hold orders need to be placed with a Fidelity representative. Buy orders can only be entered on the day of the auction between 8 a.m. and 11 a.m. ET for all Municipal Resets except for those that reset on a daily basis, where the cut-off time for placing orders is 9:45 a.m. ET.

Sell and hold orders for Municipal Resets initially purchased at Fidelity and still in the originating account can be entered up to 5 business days in advance with a representative Sell and hold orders for Municipal Resets transferred in to Fidelity must be placed on the day of the auction.On early market close days all Municipal Reset orders must be submitted by 9:00 a.m. ET.

Selling a Municipal Reset as part of the auction assures the seller of receiving par (100) whereas selling at other times, though possible, does not.

Am I eligible to trade fixed income securities on margin?

To trade on margin, you must have a Margin Agreement on file with Fidelity. If you do not have a Margin Agreement, you must use cash. To establish a Margin Agreement on an account, select Update Accounts/Features under the Accounts & Trade tab, and click Margin and Options under Account Features.

PLACING BOND/FIXED INCOME TRADES

How do I specify the fixed income security that I want to trade?

You must enter the security's CUSIP on the Trade Fixed Income page. If you know the CUSIP for the security you want to trade, enter it in the CUSIP field. If you want to search for securities, click Search Inventory. When you select the security you want to trade, the CUSIP is automatically entered for you.

See Searching Fixed Income Inventory for details about how to search for secondary market or new issue offerings.

How do I enter a quantity for a trade?

Enter quantities as follows (numbers only, no dollar signs or commas):

• For bonds and Certificates of Deposit (CDs), enter the number of bonds to trade in increments of 1 bond, where 1 bond/CD is equal to $1,000.
• Fixed Rate Capital Securities trade in shares instead of bonds. Enter the quantity in increments of 1 share, where 1 share is equal to $25.

What order types are available for fixed income trades?

You can enter the following order types for fixed income trades:

• Market (secondary market and new issue buys, secondary market sells)
• Limit Coupon (new Municipal Reset buys or on hold orders of existing positions): The limit coupon represents the minimum coupon that you are willing to accept at the next auction when the rate is reset. On a new buy, if the result of the auction is a coupon level above the level you stipulated, then your order will be filled. It's a similar result for on holder orders. If the result of the auction is a coupon level above the one you stipulated, then you would keep your position, and it would pay at the rate set at the auction. Note: At the present time, only Municipal Reset buy orders can be submitted online. To submit a sell or hold order, please contact a Fidelity representative at 800-544-6666.
• Limit Price This is the highest price at which you are willing to buy or the lowest price at which you are willing to sell securities.
• Limit Yield This represents the lowest yield at which you are willing to buy or the highest yield at which you are willing to sell securities.

What is a Request for Bid Quote?

When you need to sell a fixed income security immediately, but there are no dealer bid quotes displayed, or you wish to sell a smaller quantity than the current minimum, you may enter a request for bid quote. In this process:

• You request bids from dealers for a specific quantity.
• Dealer response(s), including bid price(s), are emailed to you and posted in the Communications Center found on the Portfolio Summary page.
• You can choose to sell at the dealer's price or let the bid response expire.
• Bid quote requests are valid only until the close of the trading day.

The bid quote request process typically engages dealers who are willing to bid on illiquid or higher risk securities. This finite pool of dealers may discontinue the practice of bidding if they believe Fidelity's customers are using this service for pricing purposes only. That's why Fidelity does not allow you to enter numerous bid requests for the same bond over the course of the day.

If you have questions, please call 800-544-5372.

What is the yield on a fixed income security?

Ask yield reflects the lowest of the yield to maturity,yield to call, or the yield to pre-refunded date. If a bond is quoted to call date or pre-refunded date, and interest rates have declined, the bond'sissuer is likely to call the bond on the next call date or pre-refunded date, if it is favorable to the issuer's interests.If a bond is called or pre-refunded the bond holder's interest payments cease and the principal is returned as of call date or pre-refunded date. If the bond holder seeks to reinvest this principal in a similar bond issue, he will likely have to accept a lower yield (and lower interest payments) consistent with prevailing interest rates. Not all bonds are callable.

The prices and yields shown on Fidelity's Fixed Income Secondary Offering tables are posted prior to the assessment of the Fidelity Brokerage Services LLC (FBS) concession. The FBS concession will be applied for customer review prior to placement of the order.

How do I enter a limit price or limit yield for a bond order?

You can enter:

• A yield limit with up to three decimal places (e.g., 4.123)
• A price limit with up to six decimal places (e.g., 4.123456)

Are limit orders guaranteed?

Although a limit order enables you to specify a price limit, it does not guarantee that your order will be executed. You should monitor your orders on the Order Status page or Indications of Interest Order Status Page.

What limitations and restrictions can I place on fixed income orders?

• All bond orders are assumed to be fill or kill .
• Only the day time-in-force limitation is permitted.
• Conditions are not applicable.

Am I guaranteed an allocation of new issue securities?

Entering an order makes you eligible for but does not guarantee an allocation of bonds. If the offering is oversubscribed (more bonds were requested than available for purchase) and you did not withdraw your order, you may receive a portion of the bonds you requested, or none at all. Fidelity allocates bonds as fairly and equitably as possible.

Will I have the opportunity to change or void a trade before executing it?

Your order will not be sent to Fidelity if you leave the Verification page before you click Place Order, or if you click Cancel.

When is my order submitted to Fidelity?

When you click Place Order on the Verification page, you are agreeing that the order information is correct, and you are authorizing Fidelity to execute the order on your behalf.

CONFIRMATIONS AND CANCELLATIONS

What trade verification and confirmation do I receive online?

When you submit an order online, you always see a Verification page. Review the Verification page carefully before placing your order. You can click Quick Balances and Quick Positions to see your account balances and positions without leaving the Verification page. In most cases, you can also click Model a Hypothetical Trade to help you review the hypothetical impact of a trade on your overall portfolio.

Once you place your order, you will see a Confirmation page displaying your order confirmation number and trade details. You can print this confirmation for your records. Once the order has been executed, Fidelity mails you a paper confirmation.

How can I cancel, or cancel and replace, a pending fixed income order?

You can attempt to cancel a pending bond or CD order that has not yet executed from the Orders page. To view open new issue municipal bond orders, select Indication of Interest from the Orders page. See Orders for more information. To attempt to cancel and replace a bond or CD order, call a Fidelity representative at 800-544-6666.

Attempts to cancel, or cancel and replace, open orders are performed on a best-effort basis. There is no guarantee that an open order can be canceled,or canceled and replaced, either in whole or in part.

Related Help Topics

• Search Secondary Offerings
• Searching Fixed Income Inventory
• Participating in and Viewing New Issue Offerings