Fixed Income Frequently Asked Questions
General Questions:
- What is the TD Waterhouse Fixed Income Centre?
- What are the conditions placed upon orders through the TD Waterhouse Fixed Income Centre?
- What is the difference between a Subject and Firm offer status?
- What types of bonds and money market investments are available through the TD Waterhouse Fixed Income Centre?
- What type of fixed income issues cannot be traded the TD Waterhouse Fixed Income Centre?
- What if I cannot find the specific fixed income security that I wish to buy or sell online?
- What do I do if I have a bond certificate that I wish to sell online?
- What search features are available through the TD Waterhouse Fixed Income Centre?
- Who can I contact regarding general questions about bonds and fixed income investments?
- Who do I contact in order to obtain technical assistance?
- What is a ladder and how does it work?
- What are bond and money market ratings?
Trading Questions:
- How can I view the status of open fixed income orders?
- Where can I view my fixed income positions already in my TD Waterhouse account?
- What quantity restrictions are there for fixed income online orders?
- What is the settlement period for Canadian fixed income instruments?
- Are there fees/commissions for trading bonds?
- Are fixed income holdings marginable?
- What do the fields in the View Orders page mean?
1. What is the TD Waterhouse Fixed Income Centre
The Fixed Income Centre allows you to:
- Buy, sell or request quotes for money market paper and bonds online.
- Search for a bond that meets your needs.
- Find prices, yields and credit ratings on hundreds of bonds and money market instruments.
2. What are the conditions placed upon orders through the TD Waterhouse Fixed Income Centre?
All orders entered through TD Waterhouse Fixed Income Centre are market
orders. In other words, investors cannot specify a limit price or a yield-to-maturity.
Subject to certain conditions, TD Waterhouse will fill buy or sell orders
placed during market hours (bonds: 8:30am-4:30pm EST / money market: 8:30am-2:00pm
EST. Note that these times may vary, usually on days preceding holidays.)
at the current price posted on the Fixed Income Centre.
Orders entered after the close of markets will be filled after market opening
the following business day provided that the price is equal to or better
than the listed price when the order was placed. Should the price move not
favour the client, the order will be cancelled. The order status can be
viewed through the Fixed Income Centre the following business day.
3. What is the difference between a Subject and Firm offer status?
All orders placed through the Fixed Income Centre are actually offers to
buy or sell. The most common types of offers are Subject and Firm. The differences
between the two are:
Subject: An offering status that has a lower probability of execution as
the price and quantity are indicative only. This status is usually placed
on an offer after defined market hours or in a fast moving market.
Firm: An offer status which has a high probability of execution. The order
can still be rejected by the contributor based on a change in the order
criteria. An example would include the inventory level changed after an
order was submitted but prior to being received by the contributor. This
status is placed on most offerings during market hours.
4. What types of bonds and money market investments are available through the TD Waterhouse Fixed Income Centre?
The following types of bonds are available:
- Government of Canada bonds
- Provincial Bonds
- Government agency bonds
- Municipal Bonds
- Investment Grade Corporate Bonds
- Zero Coupon or Strip bonds (from a variety of issuers e.g. federal, provincial governments)
The following types of money market investments are available in terms of
30-, 60-, 90-, and 180- days and one year:
- Government of Canada Treasury Bills
- Bankers' Acceptances and Bearer Deposit Notes
- Commercial Paper rated R-1 by Dominion Bond Rating Service (R-1 is "Prime Credit Quality")
Online money market and bond trades are restricted to Canadian dollar issues.
Information pertaining to all issues can be obtained using the Fixed Income
Centre's "Fixed Income Lookup" search engine. TD Waterhouse will
offer a selection of fixed income instruments that can be traded online.
These issues can be retrieved by using the "Quick Picks" tool
(for all offerings available for immediate execution) or the "Search Offerings"
tool (where investors can stipulate criteria to search for specific bonds
available for immediate execution).
The bonds available for online order execution is not an exhaustive list
of what can be traded through TD Waterhouse. Please contact a Fixed Income
Specialist (1-888-983-BOND or 1-888-983-2663) to inquire about specific issues that are not available for online trading.
5. What type of fixed income issues cannot be traded through
the TD Waterhouse Fixed Income Centre?
The following is a list of fixed income issues that cannot be traded through
the TD Waterhouse Fixed Income Centre:
- Money market and bonds denominated in foreign currencies
- Mortgage Backed Securities
- Exchange-traded bonds
- Guaranteed Investment Certificates and Term Deposits
- Hybrids and Asset-backed bonds
- Real Return Bonds
- Bonds with special features (e.g. extendible, retractable, step-up)
- Federal or provincial savings bonds
6. What if I cannot find the specific fixed income security
that I wish to buy or sell online?
TD Waterhouse offers a comprehensive representation of available fixed income securities through WebBroker. Not all fixed income securities available will be offered through WebBroker.
If you cannot find the specific fixed income security that you are looking for, please contact your local TD Waterhouse Office (1-800-465-5463) or a Fixed Income Specialist (1-888-983-BOND or 1-888-983-2663) Monday through Friday from 8:30am to 4:30pm EST).
7. What do I do if I have a bond certificate that I wish to sell online?
Bonds cannot be sold at TD Waterhouse, either online or through an Investment Representative, until they have been endorsed by the owner and deposited into the TD Waterhouse account. Certificates can be taken to any TD Waterhouse, TD Bank or Canada Trust branch where they can be signed, or endorsed, in the presence of a bank employee. The branch can send the bond certificate to TD Waterhouse so that it can be received in your account as book-based entry. Once a negotiable certificate has been received by TD Waterhouse, the bond may be sold.
8. What search features are available through TD Waterhouse
Fixed Income Centre?
TD Waterhouse Fixed Income Centre offers three ways to search for fixed
income securities:
| Quick Picks |
View a list of fixed income offerings available for immediate execution. |
| Search Offerings |
Use search criteria to find specific fixed income securities that suit your investment needs and are available for immediate online trading. |
| Fixed Income Lookup |
Search for outstanding fixed income issues using search criteria such as name, term to maturity, CUSIP etc. |
9. Who can I contact regarding general questions about bonds and fixed income investments?
General inquiries pertaining to bonds can be referred to your local TD Waterhouse office (1-800-465-5463) or a Fixed Income Specialist (1-888-983-BOND or 1-888-983-2663 from 8:30am - 4:30pm EST).
10. Who do I contact in order to obtain technical assistance?
Inquiries of a technical nature can be referred to the TD Waterhouse Electronic Brokerage Services Help Desk (1-800-667-6299).
11. What is a ladder and how does it work?
A ladder is a fixed income investment strategy where an investor staggers
maturing bonds over a longer duration to mitigate reinvestment risk caused
by interest rate fluctuations.
The TD Waterhouse Fixed Income Centre allows you to create a hypothetical
portfolio of bonds with corresponding investment statistics such as monthly
and total interest income. It also provides you with an annual graphical
representation of the bonds held and their corresponding maturity.
A ladder is built by checking off the bonds from either a search result
or a quick pick result and clicking on the Build Ladder button. This will
move you to the Build Ladder page. Once in this page, you can select the
quantity held for each bond selected and recalculate the investment statistics
based on the values entered.
Print preview will allow you to generate a printer friendly version of the
document for your review.
12. What are bond and money market ratings?
Investment Credit Ratings
Credit ratings are forward looking measures that assess the overall
financial creditworthiness of an issuer, covering capacity and
willingness to meet financial obligations. Issuer credit ratings
can be long-term or short-term.
It is important to note that credit ratings are not static as they
can be impacted by a number of factors including the economic
and competitive environments in which companies operate.
In Canada, investments are rated by three agencies: Dominion Bond
Rating Service (DBRS), Moody's Investor Services (Moody's) and
Standard & Poor's (S&P).
Rating Scales Used by Different Rating Agencies
| CREDIT QUALITY |
DBRS |
MOODY'S |
S&P |
| |
Long Term |
Short Term |
Long Term |
Short Term |
Long Term |
Global CP Scale |
Canadian CP Scale |
| Superior |
AAA |
R-1 high |
Aaa |
P-1 |
AAA |
A-1+ |
A-1 (high) |
| |
AA high |
R-1 high |
Aa1 |
P-1 |
AA+ |
A-1+ |
A-1 (high) |
| |
AA |
R-1 mid |
Aa2 |
P-1 |
AA |
A-1+ |
A-1 (high) |
| |
AA low |
R-1 mid |
Aa3 |
P-1 |
AA- |
A-1+ |
A-1 (high) |
| Good |
A high |
R-1 low |
A1 |
P-1 |
A+ |
A-1 |
A-1 (mid) |
| |
A |
R-1 low |
A2 |
P-1 |
A |
A-1 |
A-1 (mid) |
| |
A low |
R-1 low |
A3 |
P-2 |
A- |
A-2 |
A-1 (low) |
| Adequate |
BBB high |
R-2 high |
Baa1 |
P-2 |
BBB+ |
A-2 |
A-1 (low) |
| |
BBB |
R-2 mid |
Baa2 |
P-2 |
BBB |
A-2 |
A-2 |
| |
BBB low |
R-2 low |
Baa3 |
P-3 |
BBB- |
A-3 |
A-3 |
| Speculative |
BB high |
R-3 high |
Ba1 |
Not Prime |
BB+ |
B |
B |
| |
BB |
R-3 high |
Ba2 |
Not Prime |
BB |
B |
B |
| |
BB low |
R-3 high |
Ba3 |
Not Prime |
BB- |
B |
B |
| Highly Speculative |
B high |
R-3 mid |
B1 |
Not Prime |
B+ |
C |
C |
| |
B |
R-3 mid |
B2 |
Not Prime |
B |
C |
C |
| |
B low |
R-3 low |
B3 |
Not Prime |
B- |
C |
C |
| |
CCC |
R-3 low |
Caa |
Not Prime |
CCC |
C |
C |
13. How can I view the status of open fixed income orders?
The status of a fixed income order may be viewed by selecting "View Orders". This will provide detailed information about the bond orders entered for the day.
14. Where can I view my fixed income positions already in my TD Waterhouse account?
Your portfolio, including fixed income positions, can be viewed one day after trade date by selecting "Account Inquiry" and then "Display Holdings" from TD Waterhouse WebBroker's home page.
15. What quantity restrictions are there for fixed income online orders?
The minimum purchase and sell amounts for bonds is $5000 face. Both regular
and strip bonds must be traded in increments of $1000 face. The
maximum amount that can be traded is $500,000 face. The minimum
purchase and sell amounts for money market instruments is $5000. The maximum
amount that can be traded is $500,000 face.
16. What is the settlement period for Canadian fixed income issues?
| Product |
Settlement |
| All Money Market |
Same day |
| Government & Government Guaranteed with a maturity less than 3 years |
2 days |
| Government & Government Guaranteed with a maturity greater than 3 years |
3 days |
| Strips with a maturity less than 18 months |
2 days |
| Strips with a maturity greater than 18 months |
3 days |
| All other bonds |
3 days |
17. Are there fees/commissions for trading bonds?
In all fixed income product transactions, we will act as principal. We and parties related to us receive revenue based on the difference between the applicable bid and ask prices.
18. Are fixed income holdings marginable?
The following outlines the margin requirements for certain fixed income issues:
| Type |
Margin Requirement |
| Government of Canada Bonds and Federal guarantees |
4% |
| Provincial and Municipal bonds |
10% |
| Corporate Bonds |
15% |
| Provincial Savings Bonds |
1% |
| Canada Savings Bonds |
100% |
| Government of Canada T-Bills |
1% |
| Bankers' Acceptances |
4% |
| Commercial Paper |
15% |
| Guaranteed Investment Certificates |
15% |
| U.S. Treasury Bonds |
4% |
19. What do the fields in the View Orders page mean?
| Acct No. |
Identification of your current TD Waterhouse account. |
| Action |
Details of your order. |
| Buy |
An order to buy a specific bond. |
| Cancel |
An order that has been successfully cancelled. |
| Coupon |
The annual rate of interest that the issuer pays the bondholder until maturity.
- Coupon rate is constant throughout the life of the bond.
- Coupon rate is determined as a percentage of the bond's face value.
|
| CUSIP |
Each bond has a unique 9-character CUSIP number, which is similar to the ticker symbols used for stocks, options and mutual funds.
- CUSIP is an acronym for Committee on Uniform Security Identification Procedures, which was established
under the auspices of the American Bankers Association to develop a uniform method of identifying securities.
|
| Expired |
An order that has expired. |
| Issue |
Description of the bond, including issuer. |
| Maturity Date |
The date when the principal amount, or face value, of the security becomes due and payable. |
| Net Money |
Amount of bond transaction, net of transaction fees and accrued interest. |
| Order # |
A code used to track your order. |
| Pending Cancel |
An order for which cancellation has been requested, but not yet received. |
| Price |
Price of the bond. Most bonds are issued in $1,000 increments; however, the price is expressed as a percentage of par value, e.g. a single $1,000 bond priced at 90 would be worth $900. |
| Qty |
Number of bonds for the order. |
| Rejected |
An order that was rejected prior to execution. May include orders for which sufficient funds are not available. |
| Sell |
An order to sell a specific bond from an account. |
| Status |
The current state of the bond orders. |
| Time |
Time you placed the order. |
| Trans |
Type of transaction placed. |
| Yield |
Unless otherwise indicated, Yield refers to Yield-to-Maturity (YTM).
- YTM assumes that all interest received over the life of the issue is reinvested at the coupon rate of interest.
- YTM reflects the rate of return on a bond issue, taking into account its coupon, time to maturity, and dollar price.
- YTM varies throughout the life of the bond; as the price increases, YTM decreases and vice versa.
However, once a bond is purchased YTM is locked in until maturity or sale.
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Entire publication Copyright © 2001 TD Waterhouse Canada Inc. All rights reserved. TD Waterhouse Canada Inc. is a Member - CIPF.
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