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Hello and welcome to TreasuryDirect.

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You might have heard more recently
about Marketable Securities

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and had some questions

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about what they are, how they work,
and how you can purchase them.

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In this video,
we will discuss those topics.

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A Security is a loan that an investor
makes to the U.S.

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Treasury, which is then paid back,
with interest, after a set amount of time.

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We refer to this time frame as the Term.

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This is the same
whether you purchase a Marketable Security

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or a Savings Security such as a Series
I bond. With Marketable Securities

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we refer to the face amount
of the security as the Par amount.

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Marketable Securities can be purchased
below

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Par Amount,
which is called a Discount,

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above Par Amount, referred to as a Premium
or at Par Amount.

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Marketable Securities
are only available electronically,

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either through TreasuryDirect
or through a broker or dealer.

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What makes
a Marketable Security different

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is how you purchase them
and what happens once you purchase it.

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To purchase a Marketable Security,
you will participate in an auction.

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The auction is when the interest rate
or the amount below Par

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the security will be sold for,

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known as the Discount
Margin, is set. Through TreasuryDirect

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you are able to make Non-Competitive bids,
where you state

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how much you would like to purchase
but agree to accept whatever

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the interest rate or discount
margin is set at. Through

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a broker or dealer,
you can make Competitive Bids

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where you can state
not only how much you want to purchase,

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but what interest rate or discount margin

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you are willing to accept.

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Keep in mind,
while TreasuryDirect will never charge

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you any fees for our services,
many brokers and dealers will.

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Non-Competitive bids will

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be guaranteed
and the Securities will be issued

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where Competitive Bids
will only receive Securities

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if the interest rate or discount
margin are acceptable

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to the terms of the bid.
With Non-Competitive bids,

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the purchase limit is $10 million
per auction,

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while Competitive Bids
have a purchase limit based

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on how much money in Securities
is being offered.

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Marketable Securities are not able to be
redeemed prior to the end of their term,

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which is known as the Maturity Date.

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However, you can sell these Securities
on a secondary marketplace

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using the assistance of a broker
or dealer.

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Once a Marketable
Security is purchased, it

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begins earning interest
until it reaches its maturity date,

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when the Security is automatically
redeemed for the Par or Face Amount.

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When purchasing a Marketable Security,

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you might have the option
to set up reinvestments

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where TreasuryDirect will
automatically purchase a new Marketable

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Security with the proceeds
from the original purchase.

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Not every Marketable Security is eligible
for reinvestments, so make sure you watch

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the videos on the different types
of Marketable Securities.

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More information can be found
on the TreasuryDirect.gov website

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under the Treasury
Marketable Securities tab.

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And that's it.

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That is the basics
of Marketable Securities.