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| Fixed Income Frequently Asked Questions | ||||||||||||
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All orders entered through the TD Waterhouse Fixed Income Centre are market orders. In other words, investors cannot specify a limit price or a yield-to-maturity that they wish to buy or sell at. Subject to certain conditions, TD Waterhouse will fill buy or sell orders placed during market hours (bonds: 8:30am-4:30pm ET / money market: 8:30am-4:00pm ET. 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 should be reviewed by the client through the Fixed Income
Centre the following business day.
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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 and is placed on most offerings during market hours. The order can still be rejected by the offering firm 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 offering firm.
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The following types of bonds are available:
The following types of money market investments are available in terms of 30-, 60-, 90-, and 180- days and one year:
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).
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A Canada call issue is simply a bond which may be called back
by the issuer to redeem the debt prior to the maturity date at an equivalent yield of a
Government of Canada bond of the same maturity plus a premium (example, Canada call + 15bps). The
holder of the bond is paid the calculated price (based on the yield plus the additional 15bps) or par
whichever is higher. Typically there are not many doomsday calls redeemed before maturity as it is
not advantageous for the issuer to do so. This feature is more commonly attached to corporate issues.
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The following is a list of fixed income issues that currently cannot be traded through the TD Waterhouse Fixed Income Centre:
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TD Waterhouse offers a comprehensive selection of available fixed income securities through the Fixed Income Centre. 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 ET).
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Once certificates are deposited to your account, a request to sell can be made. Certificates can be taken to any TD Waterhouse or TD Canada Trust branch where they can be signed, or endorsed, in the presence of an employee. The branch will send the bond certificate to TD Waterhouse so that it can be received in your account. Once a negotiable certificate has been received by TD Waterhouse, the bond may be sold online, if eligible for trading through the Fixed Income Centre, or by contacting your local TD Waterhouse branch.
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The TD Waterhouse Fixed Income Centre offers three ways to search for fixed income securities:
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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 ET).
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Inquiries of a technical nature can be referred to the TD Waterhouse Electronic Brokerage Services Help Desk (1-800-667-6299).
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A ladder is a fixed income investment strategy where an investor staggers the maturity of various 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.
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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
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| 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 | |
| 14. | How can I view the Commentary? |
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| The Commentary is a daily Fixed Income market summary available in a PDF (Portable Document Format) file format. To view this page, Adobe Acrobat must be loaded on your PC. It is best viewed using Adobe Acrobat version 4.0 or higher along with a later version of either Netscape Navigator or Microsoft's Internet Explorer.
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| 15. | How can I view the status of open fixed income orders? |
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| 16. | Where can I view my fixed income positions already in my TD Waterhouse account? |
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| 17. | What quantity restrictions are there for fixed income online orders? |
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| 18. | 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 |
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| 19. | Are there fees/commissions for trading bonds? |
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| 20. | Are fixed income holdings marginable? |
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
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1% |
Bankers' Acceptances |
4% |
Commercial Paper |
15% |
Guaranteed Investment Certificates |
15% |
U.S. Treasury Bonds |
4% |
All
loan values are subject to concentration limits.
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| 21. | 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.
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CUSIP |
Each
bond has a unique 9-character CUSIP number, which is similar to the ticker symbols used
for stocks, options and mutual funds.
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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, including any 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 confirmed. |
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. Each bond and money market security is traded in increments of $1000, so to enter an order to buy or sell $10,000 face value of a bond, for example, input a quantity of 10. |
Rejected |
An order that was rejected prior to execution. May include orders for which sufficient funds or margin to settle the trade are not available. |
Sell |
An order to sell a specific bond from an account. |
Status |
The current state of the bond order. |
Time |
Time you placed the order. |
Trans |
Type of transaction placed. |
Yield |
Unless
otherwise indicated, Yield refers to Yield-to-Maturity (YTM).
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| 22. | Legal Notices and Disclaimers of Liability |
We endeavour to keep the rates and fees posted at this site current. However rates, fees and information is subject to change at any time without notice to users and the posted rates and fees at the site may not immediately reflect such changes.
The rating agency information and ratings are provided for convenience of reference only and while every effort has been made to provide up to date information, TD Waterhouse Canada Inc. or TD Securities Inc. do not assume any responsibility in respect of the currency of the information or the ratings. In addition, TD Waterhouse Canada Inc. or TD Securities Inc. are not in any way responsible for any inaccuracies, misrepresentations or omission in any rating agency materials or for any claims based thereon or resulting therefrom whether in negligence or otherwise.
Trade-marks and Copyrights
Certain names, words, titles, phrases, logos, icons, graphics or designs in the pages of this Website may constitute trade names, registered or unregistered trade-marks or service marks ("Trade-marks") of The Toronto-Dominion Bank ("TD Bank"), other members of the TD Bank Financial Group or of third parties and used under license by TD Bank or other members of the TD Bank Financial Group. However, the display of Trade-marks on pages at this Website does not imply that any license has been granted to any third party.
All information in this Website is protected under the copyright laws of Canada and/or other countries. Users of this Website shall be entitled to copy any information for their own personal use but may not republish or reproduce any such information in any manner, including electronic reproduction by "uploading" or "downloading", without the prior written consent of the TD Bank Financial Group. Otherwise, no one has permission to copy, redistribute, reproduce or republish, in any form, any information found in the pages of this Website.
Any unauthorized downloading, re-transmission, or other copying or modification of Trade-marks or other contents of this Website may be a violation of statutory or common law rights which could subject the violator to legal action.
Product Information
Products and services of the TD Bank Financial Group are only offered in jurisdictions where they may be lawfully offered for sale. All products and services are subject to the terms of the applicable agreement.
The information on this Website does not constitute an offer or solicitation by anyone in any jurisdiction in which an offer or solicitation cannot legally be made, or to any person to whom it is unlawful to make a solicitation.
Other Product Attributions
TD Waterhouse Discount Brokerage, TD Waterhouse Financial Planning, TD Waterhouse Institutional Services and TD Waterhouse Private Investment Advice are divisions of TD Waterhouse Canada Inc., ("TD Waterhouse") a subsidiary of The Toronto-Dominion Bank. TD Waterhouse Canada Inc. - Member CIPF.
The information in this communication is subject to change without notice. This communication does not constitute an offer or solicitation by anyone in any jurisdiction in which such an offer or solicitation is not authorized or to any person to whom it is unlawful to make such an offer or solicitation. Prospective investors who are not resident in Canada should consult with their financial adviser to determine if these securities may lawfully be sold in their jurisdiction.
UK Disclosure
In so far as the information on this site is issued in the UK, it has been approved by The TD Bank which is regulated by the Securities and Futures Authority in the conduct of investment business in the UK. You should note that prices, values and incomes of securities mentioned on this site may fall against your interests, and you may get less back as an investor than that which you put in. The investments mentioned on this site may not be suitable for all investors. If you have any doubts, you should seek advice from your investment advisor. You should note that income from investments may fluctuate. If an investment is denominated in a currency other than pounds sterling, changes in the rate of exchange may have an adverse effect on the value price or income of the investment. Past performance of an investment is not necessarily a guide to its future performance. Some investments may not be readily realizable, and it may therefore be difficult for you to sell or realize such investments, or to obtain reliable information about their value or the risks to which you are exposed in respect of them. Where reference is made to the effect of tax, you should note that levels and bases of taxation may change. Business carried on by TD Securities (U.S.A.) Inc. and TD Waterhouse Group, Inc. is not regulated in the UK. The regulatory regime and compensation arrangements in respect of such business may be different than that of the UK.
US Disclosure
This information is not to be construed as an offer to sell or a solicitation to buy any securities in the United States of America or the territories or possessions thereof. U.S. persons who wish to transact in securities should contact the nearest office of TD Waterhouse Investor Services, Inc. or TD Securities (USA) LLC.
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Entire publication Copyright (c) 2004 TD Waterhouse Canada Inc. All rights reserved. TD Waterhouse Canada Inc. is a Member - CIPF.
