Mechanics of Selling Treasuries on Interactive Brokers

[dragoncar]

I've been able to sell bonds on a few different trading platforms, so didn't expect an issue.  But those platforms typically make their own markets, I think (e.g., Fidelity)

Today I'm trying to sell a few treasuries on Interactive Brokers and it's not working.  I started with a limit order, no dice.  Switched to market and it's been, I dunno, 30 min.  Am I just being impatient?  I always hear that treasuries are the most liquid bond market, but is the problem really that nobody wants to buy my issue at any price?

How risky is this market order?  I've read that it's pretty safe to do so with treasuries when compared to stocks

I mean the spread is only .08%.  I don't really care what price I get as long as it's the market price.

[hodedofome]

You could try asking IB support. They've always been helpful for me.

I've never bought/sold treasuries outside of ETFs so I couldn't tell you what to do for sure.

[jacoavluha]

I've no experience with Interactive Brokers or selling treasuries on the secondary market. How large (or small) is the lot you're selling? That could play a factor.

[dragoncar]

I've no experience with Interactive Brokers or selling treasuries on the secondary market. How large (or small) is the lot you're selling? That could play a factor.

It's a few bonds.  Order didn't fill today maybe I'll contact them monday

[Financial.Velociraptor]

I've dabbled in deeply discounted corporates (junk bonds) at IB.  Liquidity sucks.  The broker has to make their own market.  So sometimes you will see bonds trade at or better than my limit on TRACE but IB still doesn't fill.  Basically, some other broker-dealer had inventory at your strike but IB didn't.  I imagine Treasuries are the same way.  But weird that they would have deep inventory of the most liquid security in the market? 

If you contact them, please post findings here.  I'm interested to know what the story is.

[dragoncar]

I've dabbled in deeply discounted corporates (junk bonds) at IB.  Liquidity sucks.  The broker has to make their own market.  So sometimes you will see bonds trade at or better than my limit on TRACE but IB still doesn't fill.  Basically, some other broker-dealer had inventory at your strike but IB didn't.  I imagine Treasuries are the same way.  But weird that they would have deep inventory of the most liquid security in the market? 

If you contact them, please post findings here.  I'm interested to know what the story is.

Didn't contact them, but this is what I did:

Instead of clicking "close" to populate the order form, I manually entered the CUSIP.  The CUSIP is different from the IBCID interactive brokers uses to identify the bond in my account.

When I placed the order this way, I got a notice "your order is too small to trade at NBBO - please increase size or more aggressively price".  So I increased size to 5, same message.  So I increased size to 10, filled instantly at a competitive price (somewhere between bid/ask).

So I'd say it definitely was a problem with selling too few bonds at a time, and possibly an additional problem with identification of the bond.  I don't know the size it needs to be, if less than 10 that's nice since I'm selling bonds to fund expenses and I don't want a bunch of extra cash that could be earning interest at a rate higher than IB commissions.  I had decided to just sell every 1-2 months, but it looks like for bonds it'll have to be less often.

This lesson only cost me $50 (bonds are down today, yo)

[Financial.Velociraptor]

I've dabbled in deeply discounted corporates (junk bonds) at IB.  Liquidity sucks.  The broker has to make their own market.  So sometimes you will see bonds trade at or better than my limit on TRACE but IB still doesn't fill.  Basically, some other broker-dealer had inventory at your strike but IB didn't.  I imagine Treasuries are the same way.  But weird that they would have deep inventory of the most liquid security in the market? 

If you contact them, please post findings here.  I'm interested to know what the story is.

Didn't contact them, but this is what I did:

Instead of clicking "close" to populate the order form, I manually entered the CUSIP.  The CUSIP is different from the IBCID interactive brokers uses to identify the bond in my account.

When I placed the order this way, I got a notice "your order is too small to trade at NBBO - please increase size or more aggressively price".  So I increased size to 5, same message.  So I increased size to 10, filled instantly at a competitive price (somewhere between bid/ask).

So I'd say it definitely was a problem with selling too few bonds at a time, and possibly an additional problem with identification of the bond.  I don't know the size it needs to be, if less than 10 that's nice since I'm selling bonds to fund expenses and I don't want a bunch of extra cash that could be earning interest at a rate higher than IB commissions.  I had decided to just sell every 1-2 months, but it looks like for bonds it'll have to be less often.

This lesson only cost me $50 (bonds are down today, yo)

Interesting.  For trading corporates, the minimum is usually 2 bonds.  I've found a few more liquid ones where the minimum was 1.  Have never been asked to trade 3.

[dragoncar]

Another thing I learned... treasuries settle on the same day - I did not know that.  I was able to withdraw the funds immediately, not on margin.  ACH hit my account next business day after sale.  Love IB, even if it has a learning curve.