T Bill Security Details: What's "Dated Date" and "First Settlement Date" (2024)

I bought a 4 week Treasury at Schwab
> Trade Date: 1/12/2023
> Settle Date: 1/17/2023
> Matures: 2/14/2023

Those dates makes sense. When I look the bill's Security Details, Schwab show both a "Dated Date" and "First Settlement Date" in Oct 2022, months prior to the new T-bill auction in Jan 2023. I couldn't find those date terms defined on Schwab's site or searching online.

What are "Dated Date" and "First Settlement Date"?

LookinAround wrote: ↑Fri Jan 20, 2023 9:13 amI bought a 4 week Treasury at Schwab
> Trade Date: 1/12/2023
> Settle Date: 1/17/2023
> Matures: 2/14/2023

Those dates makes sense. When I look the bill's Security Details, Schwab show both a "Dated Date" and "First Settlement Date" in Oct 2022, months prior to the new T-bill auction in Jan 2023. I couldn't find those date terms defined on Schwab's site or searching online.

What are "Dated Date" and "First Settlement Date"?

Dated date is the date interest starts to accrue. Settlement date is when the cash is formally exchanged for the bond. You did not buy a 4 week Treasury bill, you bought a 3 month bill that matures in ~4 weeks.

Dated date is the first day the Tbill started accruing interest.
First settlement date is the original issue date.

This particular Tbill was auctioned on Oct 12, 2022, and for investors who purchased at the auction, the Tbill first settled and interest began accruing on 10/18/22.

You purchased this bill not at the Treasury auction but in the secondary market.

toddthebod wrote: ↑Fri Jan 20, 2023 9:50 amDated date is the date interest starts to accrue. Settlement date is when the cash is formally exchanged for the bond. You did not buy a 4 week Treasury bill, you bought a 3 month bill that matures in ~4 weeks.

That would explain it. I bought several different tbills around that date so maybe I confused the details. But I thought only new tbills issued at auction are eligible for Auto-reinvestment? (at least at Schwab).

LookinAround wrote: ↑Fri Jan 20, 2023 10:12 am

toddthebod wrote: ↑Fri Jan 20, 2023 9:50 amDated date is the date interest starts to accrue. Settlement date is when the cash is formally exchanged for the bond. You did not buy a 4 week Treasury bill, you bought a 3 month bill that matures in ~4 weeks.

That would explain it. I bought several different tbills around that date so maybe I confused the details. But I thought only new tbills issued at auction are eligible for Auto-reinvestment? (at least at Schwab).

Technically it says it will only reinvest in new auctions. I wonder if they will rollover into a new 4-week T bill or a new 3-month T bill?

As others have posted, the "Dated Date" is the date from which interest accrues. It is not relevant for T-Bills because T-Bills do not make interest payments.

The "First Settlement Date" is the settlement date of the original issuing of the security. That auction of 4-week T-Bills issued more of the same security that was originally issued at an auction of 17-week T-Bills, which was held 13 weeks ago.

drebbe wrote: ↑Fri Jan 20, 2023 9:52 amYou purchased this bill not at the Treasury auction but in the secondary market.

FactualFran wrote: ↑Fri Jan 20, 2023 11:26 amAs others have posted, the "Dated Date" is the date from which interest accrues. It is not relevant for T-Bills because T-Bills do not make interest payments.

The "First Settlement Date" is the settlement date of the original issuing of the security. That auction of 4-week T-Bills issued more of the same security that was originally issued at an auction of 17-week T-Bills, which was held 13 weeks ago.

Thanks for all the feedback.

@FactualFran, yes. Thanks. I also just got off the phone with Schwab

• This sale was a treasury reopening:
  • In a security reopening, the U.S. Treasury issues additional amounts of a previously issued security. The reopened security has the same maturity date and coupon interest rate or spread as the original security, but with a different issue date and usually a different purchase price.
• After the fact, I can tell this was a new auction because auto-reinvestment set = YES
• Schwab is double checking: If I had purchased this treasury auction with auto-reinvestment=NO, there's no way to know after-the-fact if it was bought at auction or secondary market. Though I suppose since it's not going to be reinvested there's no need to know

I am similarly confused about this issue. On Schwab, going to Trade → Bonds → Treasury Auctions, clicking through the offerings there, one sees issued in the past. If some are on the secondary market, I don't understand why the interest, for my target duration, would be similar to new issues from the treasury. If they were issued in the past, wouldn't the interest be less (in the current rising environment)? e.g. if i want to buy a 4-week, and what's offered is an 8-week started 4 weeks ago, why would I get close to today's 4-week rate, if when it matures it's not going to offer that much? I'm probably forgetting some simple bond math. Maybe the person selling on the secondary market is forced to match the current market price? Yes that's probably it. Mystery solved.

and/or: I don't know how to tell the difference between secondary market bonds and reopened bonds, or if it matters.

cat_guy wrote: ↑Sat Jan 21, 2023 8:38 pmI am similarly confused about this issue. On Schwab, going to Trade → Bonds → Treasury Auctions, clicking through the offerings there, one sees issued in the past. If some are on the secondary market, I don't understand why the interest, for my target duration, would be similar to new issues from the treasury. If they were issued in the past, wouldn't the interest be less (in the current rising environment)? e.g. if i want to buy a 4-week, and what's offered is an 8-week started 4 weeks ago, why would I get close to today's 4-week rate, if when it matures it's not going to offer that much? I'm probably forgetting some simple bond math. Maybe the person selling on the secondary market is forced to match the current market price? Yes that's probably it. Mystery solved.

and/or: I don't know how to tell the difference between secondary market bonds and reopened bonds, or if it matters.

My understanding (and granted I'm still learning the details myself): Treasuries on auction can be either new issue or reopened Treasuries. Treasuries found on the second market are not offered at auction. In a security reopening, the U.S. Treasury issues additional amounts of a previously issued security. The reopened treasury has the same CUSIP and maturity date as the original. Both new issues and the lots of reopened treasuries have not been sold before. The secondary market contains Treasury lots that were sold in the past. The secondary market isn't available at auction.

Whoever I spoke with at Schwab said when buying at auction it doesn't make a difference if it's a new or reopened offering but I'd like to hear that reconfirmed from a Boglehead.

Also, I think you'll find this video helpful as it touches on new treasury issues v reopened treasuries v the secondary market:
Secondary Market T-Bills vs New Issue T-Bills At Auction (What's Better)

cat_guy wrote: ↑Sat Jan 21, 2023 8:38 pmI am similarly confused about this issue. On Schwab, going to Trade → Bonds → Treasury Auctions, clicking through the offerings there, one sees issued in the past. If some are on the secondary market, I don't understand why the interest, for my target duration, would be similar to new issues from the treasury.
...

The interest rate of all T Bills is zero, that is, T Bills do not pay interest. T Bills are usually sold for less than the face value that will be paid at maturity (it is possible for T Bills to be sold for not less than face value, but that would be unusual). If held to maturity, the difference between the price paid and the face value is taxed as interest income. If sold before maturity, the difference is taxed as a combination of interest income and short-term capital gain (or loss).

FactualFran wrote: ↑Sun Jan 22, 2023 11:53 amIf sold before maturity, the difference is taxed as a combination of interest income and short-term capital gain (or loss).

fascinating!

im guessing some/all tbill funds try to exploit this?

any straightforward recipe for an individual to exploit this?

cat_guy wrote: ↑Sun Jan 22, 2023 12:25 pm

FactualFran wrote: ↑Sun Jan 22, 2023 11:53 amIf sold before maturity, the difference is taxed as a combination of interest income and short-term capital gain (or loss).

fascinating!

im guessing some/all tbill funds try to exploit this?

any straightforward recipe for an individual to exploit this?

I don't understand what there is to exploit.

With a fund, net short-term capital gains of the fund are included in the income distributions of the fund. To shareholders of the fund, the income distributions of the fund are taxed at their ordinary income tax rate.

With individuals, on Schedule D the short-term capital gain (or loss) is combined with other short-term capital gains (or losses) to determine the net short-term capital gain (or loss). The net short-term capital gain (or loss) is combined with the net long-term gain (or loss) to determine the net capital gain (or loss) reported on Form 1040. In the tax calculation the net short-term gains are taxed at the ordinary income tax rate and the net long-term gains are taxed at the long-term capital gain tax rate.

FactualFran wrote: ↑Sun Jan 22, 2023 11:53 amIf sold before maturity, the difference is taxed as a combination of interest income and short-term capital gain (or loss).
With a fund, net short-term capital gains of the fund are included in the income distributions of the fund. To shareholders of the fund, the income distributions of the fund are taxed at their ordinary income tax rate.

With individuals, on Schedule D the short-term capital gain (or loss) is combined with other short-term capital gains (or losses) to determine the net short-term capital gain (or loss). The net short-term capital gain (or loss) is combined with the net long-term gain (or loss) to determine the net capital gain (or loss) reported on Form 1040. In the tax calculation the net short-term gains are taxed at the ordinary income tax rate and the net long-term gains are taxed at the long-term capital gain tax rate.

I see. I believe that short-term capital gains does not affect tax bracket. But maybe interest income also does not, so they are always equivalent. Both of these things are pretty difficult to google for. I probably need to catch up on my boglehead book reading and know these basic things.

Whoever I spoke with at Schwab said when buying at auction it doesn't make a difference if it's a new or reopened offering but I'd like to hear that reconfirmed from a Boglehead.

Yes, the Treasury can reopen as many times as they like any Treasury issue at any time; reopening just means selling more of an existing Treasury security. There is an auction for this additional amount just as there was for the original issue. Once you are past the settlement date for the reopened security it is identical to the original security, i.e., they have same maturity, coupon rate and coupon payment dates (if any) and the same CUSIP.

In an auction for a reopened Treasury you can place a non-competitve bid for up to $10,000,000 face amount of securities. By bidding non-competitively you agree to accept the rate, yield, or discount margin determined at the auction, but buying at auction avoids the cost of crossing the bid/ask spread in the secondary market.