Treasury Direct vs. Brokerage
Moderator: Global Moderator
Treasury Direct vs. Brokerage
Is there a difference between buying 30 year treasuries from Treasury Direct versus a brokerage like Fidelity as far as risk is concerned? Opinions?
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Pascal
Re: Treasury Direct vs. Brokerage
I don't think so.
There are probably theoretical differences in risk, but I think the exposure in either case is remote enough not to worry about.
There are probably theoretical differences in risk, but I think the exposure in either case is remote enough not to worry about.
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Re: Treasury Direct vs. Brokerage
Theoretically it would be safer to hold Treasuries directly since there is no intermediary. As a practical matter, however, I don't think there is any additional risk. Even if you hold them directly, one or more intermediaries (a dealer and/or one or more banks) will have to become involved if you ever want to sell them and receive payment.
Also, I'm very confident the Treasury would come down immediately like a ton of bricks on any first level (or even second or third level) intermediary institution or participant that was accused of false dealings in the straight forward holding of Treasury debt. There is just too much at stake for the USG. After all, most Treasury securities are (and traditionally have been) held for beneficiaries through intermediaries. Any "chain of custody" or similar dispute even remotely close to these securities would immediately negatively impact both the primary and secondary markets and thus the Treasury's and Federal Reserve's ability to buy and sell government debt. Even under stressful conditions, no one in the Treasury market would benefit from such a situation.
There are a lot of things to worry about in today's financial world, but IMHO this isn't one of them.
Also, I'm very confident the Treasury would come down immediately like a ton of bricks on any first level (or even second or third level) intermediary institution or participant that was accused of false dealings in the straight forward holding of Treasury debt. There is just too much at stake for the USG. After all, most Treasury securities are (and traditionally have been) held for beneficiaries through intermediaries. Any "chain of custody" or similar dispute even remotely close to these securities would immediately negatively impact both the primary and secondary markets and thus the Treasury's and Federal Reserve's ability to buy and sell government debt. Even under stressful conditions, no one in the Treasury market would benefit from such a situation.
There are a lot of things to worry about in today's financial world, but IMHO this isn't one of them.