Fixed Income FAQs:
Trading Bonds/Fixed Income Securities
Fixed income investments generally provide a return in the form of fixed periodic payments. At maturity, fixed income investments seek to 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?
- Buy or sell secondary market fixed income offerings.
- Buy new issue fixed income offerings.
When can I enter orders for secondary fixed income securities on Fidelity.com?
You can enter orders during the standard market session, which is generally 8 am ET to 5 pm ET. Occasionally, the bond market may close early at 2 pm ET due to a market holiday. Please note that bid requests for bonds you are seeking to sell must be requested by 4 pm ET.
Are fixed income securities eligible to be traded on margin?
Most secondary market bonds are marginable. To determine the cusip and account margin eligibility, call a Fixed Income Specialist at (800) 544-5372.
Some secondary market bonds are not marginable due to the size of the issue.
While CDs can be purchased in either the new issue or secondary market in type margin, they have a 100% initial and maintenance requirement.
You cannot use margin to purchase newly issued municipal bonds. Newly issued municipal bonds must be held in the cash account (type 1) for 30 days from the effective date before being margined.
Margin trading entails greater risk, including, but not limited to, risk of loss and incurrence of margin interest debt, and is not suitable for all investors. Please assess your financial circumstances and risk tolerance before trading on margin. Margin credit is extended by National Financial Services, Member NYSE, SIPC.
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.
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 in the secondary market?
Due to the limited trading volume in the fixed income market, using Fidelity.com you may only place limit orders for fixed income securities in the secondary market. Limit orders can be placed when there is an existing bid or offer for the security. Limit orders can be placed in terms of price or yield:
- A Limit Price Order represents the highest price (in terms of par value) at which you are willing to buy or the lowest price (in terms of par value) at which you are willing to sell securities.
- A Limit Yield Order represents the lowest yield at which you are willing to buy or the highest yield at which you are willing to sell securities.
Limit orders can further be defined as either marketable or non-marketable.
- A marketable limit order is generally placed at an existing bid or offer price, thus insuring that a customer does not receive a worse price than what is displayed at the time of the order.
- A Non-Marketable Limit Order means that you can adjust your limit price (or yield) to a value away from the displayed inside bid or offer.
For example, if you see a bond available for purchase priced at 105, and you are of the opinion the price is too high, you can attempt to enter a Non-Marketable Limit Order at a lower amount, for example 104.
Non-Marketable Limit Orders generally have a lower chance of execution than Marketable Limit orders.
What order types are available for fixed income trades in the new issue market?
For new issue municipal bonds or new issue structured products, you can place a New Issue Order.
- A New Issue Order is submitted by you to let Fidelity know that you want to become eligible to receive an allocation of a new issue municipal bond or structured product. The information submitted includes the brokerage account from which the funds to pay for the securities will be deducted, the security's CUSIP, and the maximum quantity of securities that you would be willing to purchase. By placing a new issue order for a municipal or structured product security, you are expressing your desire to participate in a new issue offering.
- For new issue orders for municipal securities, unless the order is cancelled by you, you will participate in the allocation process. Allocations may be made in whole, in part, or not at all. Updates regarding the order are sent to you as an alert that is sent by email or viewable in the Service Message Center.
For New Issue Treasury's or New Issue Treasury Inflation Protected Securities (TIPS), you can place a Market Order.
- The Treasury Auction process is a way for the federal government to raise funds in order to finance its activities. Once the amount to be auctioned and maturity date is announced, you can enter a non-competitive bid for up to $5,000,000.
- A non-competitive bid means that you agree to accept the high rate or yield set at auction.
- It's important to note that the dollar amount is at the household level, so if you enter multiple non-competitive bids for the same Treasury Auction, the aggregate amount must total no more than $5,000,000.
Institutions can enter competitive bids which the Treasury accepts in ascending order in terms of their rates and yield. All bidders, non-competitive and competitive, will receive the same rate and yield as the highest accepted bid.
For New Issue CDs or New Issue Agency bond orders, you can enter a Market Order.
- While a Market Order is generally thought of in the equity market as 'the next available price', when it comes to new issue CDs or Agency bonds, there is only one next price: 100, which is otherwise known as par. There is no mark-up for trades in the new issue bond market, and there is usually no accrued interest on the security. Therefore, purchasing these security types as a new issue generally costs $1,000.
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.
- Track your Request for Bid Quote in the Bond & CD Bid Quote Status pageLog In Required. To access, select the Bid Requests page link from the Request Bid Quote page or the Fixed Income landing page.
- You can choose to sell at the dealer's price or let the bid response expire.
- Check the Bid Status column to see what time your Bid quote response is valid until. Bid quote responses may be valid until the end of the day, but some may expire sooner.
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.
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's issuer 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 mark-up or mark-down 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., 1.234)
- A price limit with up to six decimal places (e.g., 99.123456)
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 Activity & Orders tab.
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.
Once you place your order, you will see a Confirmation page displaying your order confirmation number and trade details. Confirmations can be found in the Statements tab on Fidelity.com, you can print this confirmation for your records. Once the order has been executed, Fidelity mails you a paper confirmation unless you are signed up for eDelivery.
How can I cancel 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 the "View any order you may have submitted for new issue bonds" link 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 800-544-5372.
Attempts to cancel open orders are performed on a best-effort basis. There is no guarantee that an open order can be canceled either in whole or in part.
What types of bonds aren't offered on Fidelity.com but may be available on a reverse inquiry basis?
If you are looking to trade a particular product type or specific cusip that is not displayed on Fidelity.com, you may be able to find the offering by contacting Fidelity directly. Product types such as Mortgage Backed Securities, non-Dollar denominated corporate and foreign sovereign bonds and Municipal Resets may be able to be traded. Keep in mind that availability may be limited due to liquidity, minimum purchase requirements, and trading hours, among other factors. Please call a Fixed Income Specialist at 800-544-5372 for details.
Fixed Income Research and Market Data
What are the fundamental differences between equity research and fixed income credit research?
Credit/fixed income research looks at the likelihood that an issuer will be able to meet financial obligations, including debt payments. They often review the issuer's financial history and determine whether market conditions will be conducive to repayment. This work is done to justify a credit rating supplied by one of the three major ratings agencies, Moody's, S&P and Fitch. Equity research is focused on analyzing financial data and trends for a company. An analyst reviews public records of businesses in order to predict the company's future financial needs. Their report is focused on company finances and describes the business's investment potential by assigning analyst's opinions, such as buy, sell, hold, etc.
What is a market benchmark and how do they differ from yield curves?
A Market Benchmark is a comparative average used when comparing the performance or volatility of a specific security. The benchmark used will vary depending on the instrument you're comparing. We are providing benchmarks for the overall bond market, US Treasury, Municipal, Agency and Corporate market. The benchmark shows you how all instruments included in the index fared on average. You can then use that as a comparison to a security you are considering. The major difference between benchmarks and yield curves is specificity. Yield curves look at a more focused segment of a market than benchmarks. For example a Municipal benchmark would look at the entire Municipal Market. Municipal Yield curves would look at specific credit ratings or even types of Municipal bonds.
What is the difference between research and commentary?
A research report includes an analysis of the securities of individual companies, industries or municipalities, and that provides information upon which an investor can form an investment decision. Commentary is an opinion or point of view that could be one element in coming to an investment decision. An investor can base an investment decision based on anything they want to.
Why do you have Industry Reviews on the Corporate market page but not sector review?
We do have sector reviews but they are not in their own section. They can be found in Latest Research Reports.
Search Secondary Offerings
How do I search the secondary market for offerings?
To search for individual fixed income offerings in the secondary market available through Fidelity, navigate to the News & Research tab > Fixed Income, Bonds & CDs. There are multiple ways to search for secondary market offerings. You can:
- Use the tool at the top center to search for bonds by CUSIP or keyword.
- Quickly search for bonds using the Yield Table found under the Yields tab in the center of the page. Here, you can scan yields across the yield curves of the various bond types.
- Click the Bonds tab to use the advanced search offerings page and use the tabs across the top to search for particular bond types by a variety of criteria (Maturity Date, Coupon, Yield, etc.).
How do I use the Key Search Criteria section?
Use this section to focus your bond search. Search criteria are in dropdown menu or slider format, allowing you to make your selection without having to leave the search results page. For Maturity Date, you can either type the date in MM/YYYY format, or click the calendar and select month and year. For Ask Yield, the default is All, but you can move the gray arrows along the blue slider to change the default value range. The default value range is defined by the bond or CD offerings available at the time of your search. Note: the criteria types in this section differ depending on which bond type you're searching for.
Learn more about Maturity Date, Ask Yield to Worst, Moody's Ratings, S&P Ratings, Underlying Ratings and Bond Type.
How do I use the Price, Quantity & Coupon section?
You can select values for the search criteria in this section in two ways: you can overwrite the default values in the Min and Max fields, or you can move the gray arrows along the blue slider to change the default values. Please note your entries must be in numerical format and you will not be able to enter values outside the default range.
How do I use the Call & Redemption Features section?
The dropdown menus under Call & Redemption Features default to All. You can change these selections by clicking into each dropdown menu and choosing a different option.
How do I use the Other Features section?
The dropdown menus under Other Features default to All. You can change this selection by clicking into each dropdown menu and choosing a different option.
Where does Fidelity get its inventory of fixed income offerings?
Fidelity's fixed income inventory is composed of offerings from Fidelity Capital Markets, and various third-party providers. Many of these securities can be viewed and traded online. Note that Fidelity's inventory will generally represent a subset of the universe of outstanding securities of a given bond type.
Fidelity may get bonds directly from national and regional broker dealers or use national and regional broker dealers that are affiliated with the various Alternative Trading Systems that Fidelity uses.
What is a fixed income ATS?
A fixed income Alternative Trading System (or ATS) is an electronic marketplace that aggregates securities, bringing the offerings of multiple bond dealers together in a single marketplace.
Fidelity uses several of the largest ATSs. Through them, you have access to over 300 participants that contribute and/or distribute fixed income securities.
By partnering with these ATSs, Fidelity is able to offer you a broad variety of fixed income inventory. Contributors to the inventory include securities firms such as UBS, Credit Suisse Group, and Bank of America, N.A. Fidelity is also a contributor of inventory to these offering platforms.
By pooling inventory in this way, fixed income ATSs assist in creating a more electronically enabled, centralized marketplace for fixed income securities.
How do I narrow my search?
The search results page displays all the bonds that meet your criteria.
- Sort your results using the column headers according to your preferred criteria.
- Note the Attributes and Issuer Events columns, which highlights important bond characteristics, including whether it is callable. For municipal and corporate or agency/GSE bonds, this column also includes any Material Events (ME) or Issuer Events (IE) from the recent past. Learn more by clicking the ME or IE links.
- Compare two bonds by selecting Compare Two Bonds from the Select Action dropdown at the top right.
Note: Bond attribute and analytics information are provided for informational and/or educational purposes and are not intended to provide tax, legal, or investment advice and should not be construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any security by Fidelity or any provider. Neither Fidelity nor any supplier of market data guarantees the timeliness, sequence, accuracy, or completeness of market data or any other market information, or messages disseminated by any party.
How can I see the ways in which a bond purchase might affect the overall credit quality and maturity of bonds in my total fixed income portfolio?
Fidelity provides a couple of tools that can help:
- Portfolio Review: Use this tool to help diversify your portfolio according to your needs, with investment strategies and guidance.
- Fixed Income Analysis Tool: Use this tool to get a comprehensive view of your fixed income portfolio, including outside and hypothetical positions.
You can access Portfolio Review and Fixed Income Analysis Tool from the Accounts & Trade tab > Portfolio, then selecting the Analysis tab. Please note that you must be logged in.
What does Fidelity mean by "View Most Recent Trades"?
From the Bond Details page for corporate, municipal and agency/GSE bonds, the Price & Performance tab displays the most recent reported trade as Recent Trade (under Basic Analytics), and provides a link to View Recent Trades. Clicking on this link will open a pop-up window to display up to one year's worth of the most recent trades, with the time, price, and size/quantity of each trade.
The trades listed are trades that have occurred across the U.S. bond markets, not just Fidelity's most recent trades or the trades of Fidelity's customers. All dealers are required to report this information to self-regulatory organizations (the Financial Industry Regulatory Authority or FINRA for corporate and agency/GSE bonds, the Municipal Securities Rulemaking Board or MSRB for municipal bonds). The information is in the public domain and Fidelity provides a real-time display of this data as a service to you.
How do I use Recent Trades?
Recent Trades can be viewed either in a table or chart by selecting the toggle at the top left. Filter the displayed trades to any combination of Customer Buy, Customer Sell, or Dealer to Dealer.
In the table view, sort any of the column headers in ascending or descending order.
In the chart view, view the chart by either price or yield. Hover over any of the trades for specific trade details. Narrow the historical trades in view my using the slider at the bottom. To view more recent trades, select the double chevron on the left side of the page.
What do TRACE and MSRB stand for?
Trade Reporting Compliance Engine, or TRACE, is owned and maintained by FINRA to track trading activity in U.S. corporate bonds and agency/GSE bonds. The Municipal Securities Rulemaking Board, or MSRB, is responsible for making the rules that regulate the dealers of municipal bonds, municipal notes, and other municipal securities.
How do I place a bond or CD order?
Each bond on the Search Results page has a Buy link and a Sell link next to it. Each of these will take you to the Trade screen. Some of the offerings will include a book symbol in the Depth of Book column. Depth of Book provides a display of additional bids and offers in a given security in addition to the best bid and offer price. It allows you to assess the liquidity of a given bond or help you buy a larger quantity. It may be beneficial to review prior to initiating a trade.
You can also:
- Access the Trade screen from the Accounts & Trade tab > Portfolio > and choose Trade Fixed Income from the Select Action dropdown
- Use the Trade links on the Bond Details Offering page.
- Use the Trade links on the Bond Details Analytics page.
Note: To buy or sell fixed income securities, you can also call a Fidelity representative at 800-544-5372.
Searching Fixed Income Inventory
What do "New Issue" and "Secondary Market" mean in the context of fixed income investing?
Most of the bond types (and CD types) Fidelity provides access to are available as both new and secondary issues. New issues are fixed income securities that may be purchased directly from the issuer through Fidelity, such as participating in a Treasury Auction, or submitting an order in a new Municipal bond offering. Once a security has been priced and issued, it moves to trading on the secondary market, which, for bonds, is predominantly an over-the-counter market.
For new issue bonds, purchasers do not pay a markup for the transaction. Instead, the issuer pays a concession to the broker dealers that distribute the offering on their behalf. In the secondary market, owners of a bond are charged a mark-down when they sell a bond, and buyers are charged a mark-up when they purchase a bond.
How can I search for secondary market offerings?
Navigate to the Fixed Income page by selecting News & Research then Fixed Income, Bonds & CDs from the navigation bar. Here, you can either enter a CUSIP to search for a particular security, or enter criteria to refine your search and view a list of securities that match your criteria. You can search for Treasury, Municipal, Corporate, or Agency/GSE bonds, as well as Certificates of Deposit (CDs). You can also perform searches across New Issue Offerings and Secondary Offerings (i.e., combining multiple bond types in a single results display).
If you're searching by criteria, enter search criteria in the relevant fields on the Find Bonds & CDs page. Navigate there by selecting the Bonds tab in the middle of the Fixed Income landing page. You don't need to specify information for all fields, only those that will produce a listing of bonds that may meet your investment needs.
How do I search for new issue offerings?
By selecting the relevant link on the Find Bonds & CDs page, you can view information about new issue offerings of Treasury and Treasury Inflation Protected Securities (TIPS) auctions, CDs, Municipals, Agency/GSE, Corporate and CorporateNotes ProgramSM bonds, and Structured Products. For new issue Municipal bonds, you see a summary screen showing all issuers. Click Search Offerings to see the individual securities offered by each issuer.
How can I use the search results pages for secondary market and new issue offerings?
The search results pages indicate the total number of offerings found.
You can click an issuer's name/description to view additional information about a security (e.g., if it is callable, federal income tax exempt, minimum investment amount, coupon interest payment frequency, etc.).
Click Trade to enter an order to buy a particular security. Selecting Trade displays the Trade Fixed Income page and automatically fills in the selected security's CUSIP. (You may need to select the account in which to enter the order before you see the Trade Fixed Income page.) Click Participate to enter an indication of interest in participating in a new issue Municipal, or Structured Product offering.
What are material events and issuer events?
Material events reflect information that issuers of municipal bonds file with the MSRB's Electronic Municipal Market Access (EMMA) website at https://emma.msrb.org. Issuer events provide similar information for Corporate and Agency/GSE bonds (e.g., an upgrade or downgrade, or the issuer being placed on credit watch by ratings agencies like Moody's® and S&P®). Fidelity makes these events available to its customers for informational purposes only, and has made no independent evaluation of the information. You must make your own evaluation of the information and how it may influence your investment decision.
How do I view material/issuer events?
For secondary municipal and corporate bonds, you can view events or additional information (e.g., rating upgrades or downgrades) about these bonds if available. Material and Issuer Events are visible in the Attributes column of the bond search results table. If relevant events are available, "(ME)" or "(IE)" is displayed in the Attributes column. Click "(ME)" or "(IE)" to see the details.
What are Attributes?
Attributes, found in the far right of the offerings tables for Secondary bonds, New Issue Bonds, and CDs, highlight important attributes or features an investor should consider before purchasing a bond. These include whether the bond has Call Protection (i.e., is non-callable) or whether it has had any recent Material Events (for Municipal bonds) or Issuer Events (for Corporates and Agencies). For CDs, use Attributes to verify the CD is FDIC-insured or if it has Blue Sky restrictions.
What are the Bond Details pages and how do I access them?
The Bond Details pages provide over 40 additional information and data points about a fixed income security. The Bond Details pages are comprised of two separate pages, accessed via two tabs labeled "Offering" and "Analytics".
The Offering page lists features or characteristics of the bond that in most cases are permanent features specific to that issue (e.g., CUSIP, maturity date, call information). Two fields that can vary over time are the Moody's and S&P ratings, which rise or fall in line with the issuer's credit standing as assessed by those two ratings agencies. For callable bonds (bonds that do not have call protection), the Offerings page will indicate "Call Protection: No" and the word "No" will link to the call schedule (when available).
The Analytics page contains pricing data about the security or other analytics that have as their foundation a current price. In addition to the current offered price and related yield, the Analytics page offers the price from the close of business (Third-Party Price) and the current yield to worst and yield to maturity of the offering, as well as risk measures such as duration or option adjusted spread. For Secondary Corporate and Municipal bond details in the Analytics tab, see the Recent Trade field and those directly under it for historical information on the most recent trade price across the US bond market. Note that the Analytics page for a new issue bond will not contain much data due to the lack of available live or historical price information.
You can access the Bond Details pages by:
- Clicking a bond's Description in a bond search results table.
- Clicking on the CUSIP from your account's Positions page (if you own the bond).
About New Issue Offerings
Am I authorized to participate in new issue offerings?
To participate in new issue Municipal offerings, you must have a Fidelity brokerage account, and you must be signed up for Fidelity Alerts. For all other new issue product types, it is recommended that you are signed up for Fidelity Alerts. Fidelity Alerts allows you to receive new issue notifications as well as other account or trade related information by email.
To set up Fidelity Alerts, select News & Research, then Alerts. Select Fixed Income New Issues and Secondary Products in the Products and Offerings section. Read the description of the alert, and choose the alert(s) that is appropriate for you.
What types of new issues are available to purchase on Fidelity.com?
- Certificates of Deposit
- Corporate Notes ProgramSM
- Structured Products
- Treasury Auctions, including TIPS Auctions
For detailed information each of these new issue types, go to Products, then Fixed Income.
Minimums, Restrictions, and Fees
What are the minimum quantities for new issue offerings?
- For new issue municipal bonds, the minimum quantity is 5 bonds (typically costing at/around $5,000 or at/around $1,000 per bond), with increments of 5 bonds thereafter.
- Treasury auctions, new issue CDs, and CorporateNotes Program offerings have a minimum quantity of 1 bond (typically costing at/around $1,000 per bond), with increments of 1 bond thereafter.
- New Issue Agency/GSE offerings vary in minimum and increment quantity. Generally, minimums range from 1 to 10 bonds. Increments range from 1 to 5 bonds.
What are the fees and bidding restrictions on Treasury auctions?
- There is no charge for Treasury Auction orders placed online at Fidelity.com. A $19.95 fee will be charged on all Treasury Auction orders placed through a Fidelity representative.
- Non-competitive bids are limited to no more than $5 million in a bill, note, bond, or TIPS auction.
- A bidder bidding competitively for his or her own account may not bid non-competitively for his or her own account in the same auction.
- Prior to the designated closing time for receipt of competitive tenders, a non-competitive bidder may not enter into any agreement to purchase or sell or otherwise dispose of the securities that may be acquired in the auction.
What are restrictions on new issue CD offerings?
Not all CDs are available in every state. Each state has its own set of laws to offer securities for sale in its state, and those laws are referred to as Blue Sky laws. As a result, a state restriction is known as a Blue Sky restriction and will vary by the issuing bank and offering. On Fidelity.com CD pages, "SKY" is used as an Attribute to identify those CDs with Blue Sky restrictions. Click SKY to see the restricted states.
New issue municipal bond orders
What is a new issue municipal bond order?
For New Issue Municipal bonds, you can submit an order to let Fidelity know that you want to become eligible to receive an allocation of securities. You submit information such as the brokerage account (from which the funds to pay for the securities will eventually be deducted if allocated), the security's CUSIP number and the maximum number of securities that you would like to receive. By placing an order, you are participating in a new issue offering.
What do I have to do before entering an order for a new issue municipal bond?
Before entering an order for a new issue municipal bond, review the preliminary official issue document (prospectus, preliminary official statement, offering circular, or term sheet). These documents contain information about the offering and issuer that the underwriter and issuer decided an investor should know in order to make an informed investment decision. You can view preliminary official issue documents by clicking the relevant link next to the issue in question.
Next, sign up for New Issue Offering Alerts within the Fixed Income Alert section, by going to Research, then Alerts and then selecting Fixed Income New Issues & Secondary Products under the Products & Offerings section. This will allow Fidelity to send you notification of the price and size of the offering.
How do I submit an order for a new issue municipal bond?
On the Search Results page for a relevant new offering, click Participate. Select the account in which you want to purchase and pay for the securities.
To have the opportunity to participate in a new issue offering, proceed to the Trade page and enter an amount in which you specify the maximum number of bonds you are interested in purchasing. In most cases, 1 bond is equal to $1,000 face value. For example, if you want to buy $5,000 face value of a municipal offering, you enter 5 in the Quantity field. All new issues municipal bond orders must be placed with a minimum and increment order of 5.
Once you've entered the quantity, select Preview Order. To place the order, select Place Order.
How do I confirm a new issue municipal bond order?
You receive a notification once an offering for which you've submitted an order has been priced and the size of the offering has been announced by the underwriter.
If pricing of the security remains unchanged or moves lower, you will not need to take any action to confirm an order.
If pricing of the security moves higher, you will receive an alert that requires you to take further action if you wish to cancel your order. If you fail to contact Fidelity to cancel the order prior to final pricing, you will participate in the allocation process.
How long do I have to decide on whether to accept the repricing on a new issue municipal offering?
If you order is subject to a repricing and the price is adjusted above the original price, you will receive a Repricing Alert. You then have one hour from receipt of the repricing alert to cancel or adjust your order. If you do not cancel or adjust your order, you will participate in the allocation process.
How do I view an open new issue municipal bond order?
To view an open new issue municipal bond order, select the Accounts & Trade tab and select the Trade option. Then select Orders from the left-hand status bar, then click Indications of Interest from the Order Details page. The New Issue Order Details page will display.
The New Issue Orders Details page displays all open new issue orders for the following types of new issue offerings:
- New Issue Municipal bonds
- Structured Products
From this page, you can edit or cancel a new issue order.
How do I withdraw or change a new issue municipal bond order?
If you do not want to purchase the bonds, you must withdraw (delete) any new issue municipal bond order prior to the final pricing of bonds. If you fail to contact Fidelity to cancel the order prior to final pricing, you will participate in the allocation process.
To delete an a new issue municipal bond order, go to the New Issue Order Details page. To go there, select Orders from the Select Action dropdown menu on the Account Summary page. Then, on the Order Details page, click the New Issue Orders hyperlink at the top. Select the account for which you've submitted the order. To update an order, click Edit or Cancel next to the issue that you wish to update.
Attempts to edit or cancel new issue municipal bond orders are performed on a best efforts basis. There is no guarantee that an indication of interest can be changed or deleted, in whole or in part.
What kind of notification or confirmation do I receive once an offering has been allocated?
Once an offering has been allocated, the securities are placed in your account. You can check your account history or positions on Fidelity.com to see if you received an allocation of securities. When you submitted an order, a notification was sent via email that you registered when you signed up for Fidelity Alerts.
Once securities are allocated, you receive a written confirmation. For new issue municipal offerings, the official statement (OS) is available on MSRB's Electronic Municipal Market Access (EMMA) website at https://emma.msrb.org/. The OS contains the same type of information included in the preliminary document, along with amendments such as the exact size of the offering, the net proceeds going to the issuer, and the concession being given to the underwriter.
What are the different stages of a new issue Municipal Retail Order Period?
The Retail Order Period (ROP) available for customers to place an order for a New Issue municipal bond can vary widely from issue to issue. Some of those conditions are outlined below:
- The ROP may only be a couple of hours or may last up to two days.
- Some CUSIPs may not be available for the entire duration of the ROP due to over-subscription.
ROPs generally open around mid-morning, for example 10am ET. However, as some deals are priced at a spread to the Treasury, the ROP may be delayed by hours or re-scheduled in a volatile marketplace. For this reason, customers can experience some level of frustration when attempting to place an order.
The following serves as an illustration of the life of a New Issue Municipal bond issuance:
- Deal announcement can vary widely. Generally though, customers may start to call in with questions about an upcoming deal about a week prior to the ROP, as they will have heard about the offering on the radio, or from another broker/dealer.
- The marketplace will set an appropriate price for the series of bonds being offered. This is represented by the Price and Yield information available on that new issue municipal bond's Detailed Offerings page on Fidelity.com.
Retail Order Period
- The Retail Order Period can last anywhere from a couple of hours to two days. It is important for customers to monitor their alerts, as they will receive emails for upcoming offerings. Expected Order Period information is available on the alert, and on the New Issue Municipal Page.
- ROPs can close early, if an issue becomes oversubscribed.
- ROPs can be delayed in the event of a volatile marketplace.
Institutional Order Period
- The Institutional Order Period (IOP) generally occurs after the ROP, and lasts 1 day.
- Final Pricing is generally available the day after the IOP, and is typically out either late morning or early afternoon.
- Final pricing levels may differ from preliminary pricing levels:
- If Final price is the same or better for the customer (price is lower/yield is higher), then customers cannot cancel their Indication of Interest (IOI) and will participate, subject to allocation.
- If Final price is worse for the customer (price is higher/yield is lower), then customers IOIs are filled unless they contact Fidelity to cancel their IOI. Oftentimes, the cancellation window is very brief.
- Allocation generally occurs the day following final pricing. Often, customers may receive full allocation, meaning if the order is, for example, 25 bonds, the customer will receive all 25. On occasion, an order will be oversubscribed. In these cases, customers might receive a partial or possibly even no allocation.
- If a deal is undersubscribed, Fidelity may post balances of new issues to its website.
In general, the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk, liquidity risk, call risk, and credit and default risks for both issuers and counterparties. Any fixed income security sold or redeemed prior to maturity may be subject to loss.