BRUNCH
How to buy T-bills: The mechanics
Tay Peck Gek
Who’s eligible?
Individuals, including non-residents, who are at least 18 years old and not bankrupt; and institutions
Accepted sources of funds:
Cash, supplementary retirement scheme (SRS) funds, and Central Provident Fund ordinary account (OA) and special account (SA) savings
What you need:
- An individual Central Depository (CDP) account with direct crediting service activated. As there has been a high volume of CDP account applications, it now takes a minimum of 20 work days to process.
- SRS account, if using SRS funds
- Completed CPF Self-Awareness Questionnaire if using CPF funds
- CPF Investment Account (CPFIA), if using CPF OA savings
How much can you invest?
The minimum investment is S$1,000. The maximum investment is 15 per cent of the issuance size, for both competitive and non-competitive applications by each individual investor. There is also a cap of S$1 million on non-competitive bids.
When can you buy them?
Six-month T-bills are issued once every fortnight. One-year T-bills are issued quarterly.
How do you apply?
The three local banks – DBS, OCBC and UOB – accept T-bill applications.
- If using cash, apply via ATMs, online banking or the bank’s mobile app. Applications close the night before the auction.
- For SRS, use online banking; for OCBC, mobile app too. Applications also close the night before the auction.
- For CPF, investors have to apply in person at any bank branch. Applications close two business days before the auction for DBS and OCBC; and two or three business days before auction for UOB, depending on whether you have a debt securities account or not.
Fees to be aware of:
- None for SRS funds, cash and CPF SA funds
- S$2 or S$2.50 plus goods and services tax (GST) for using CPF OA funds or selling in the secondary market; DBS said it does not levy a fee if an application is unsuccessful
- For CPF OA investors, there is also a fee of S$2 plus GST per counter per quarter
When deduction takes place:
- Cash: The investment amount is debited from your deposit account at application. Unallotted amounts and any discount will be refunded on auction day.
- SRS: At application, funds are first earmarked. This amount is then revised to the settlement amount (investment less discount to face value) for successful applications on auction day. Deduction takes place on settlement day. The earmarked amount will be released for unsuccessful applications.
- CPF OA: The bank will request funds from the CPF Board (CPFB) there is if insufficient balance in the CPFIA, and the amount will be deducted on the settlement date. If there is a sufficient balance in CPFIA, the amount is earmarked one day after auction and the deduction made from CPFIA on settlement day.
- CPF SA: The bank will request funds from CPFB, which will deduct the funds from SA one day before settlement or issuance date.
How to check allotments?
- Cash: Reflected in your CDP account/statements
- SRS/CPF: Reflected in your SRS/CPF accounts/statements
