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To participate in new issue offerings, you must have a Fidelity brokerage account, and you must be signed up for Fidelity Alerts. Fidelity Alerts allows you to receive new issue notifications as well as other account or trade related information by pager, e-mail, two-way pager, or personal data assistant (e.g., Palm Pilot).
To set up Fidelity Alerts, select Accounts & Trade > Update Accounts/Features, and click Alerts under Communication Options. Click Custom Setup, then New Issue Offerings / IPOs.
For detailed information each of these new issue types, see Products > Fixed Income.
Not all CDs are available in every state. Each state has its own set of laws to offer securities for sale in its state, and those laws are referred to as blue sky laws. As a result, a state restriction is known as a Blue Sky restriction and will vary by the issuing bank and offering. On Fidelity.com CD pages, "SKY" is used as an Attribute to identify those CDs with Blue Sky restrictions. Click SKY to see the restricted states.
Municipal Resets have several unique aspects and steps in their order process.
First, investors should note the next reset date that appears on the offering table. This date is key, since it is the date of the next auction, providing investors with the opportunity of participating and ultimately purchasing bonds. Orders must be received between 7 a.m. and 11 a.m. ET on the day of the reset, or for Municipal Resets that reset daily, between 7 a.m. and 10 a.m. ET. The above restrictions apply to orders entered via Fidelity.com and through representatives.
Second, investors should take the minimum quantity into account. Municipal Resets vary in their purchase size requirements from issue to issue, but the minimum is typically 25 bonds, or $25,000 face value invested.
When purchasing a Municipal Reset, investors cannot place market orders, but instead need to submit a limit coupon order which will be the coupon submitted for the purposes of the auction. If the limit coupon submitted is above the clearing coupon of the auction, the order will not be filled. If the limit coupon submitted is below the clearing coupon decided at the auction, the bidder will receive the auction clearing coupon rate which will be the same for all successful bidders at the auction.
For continued ownership of a Municipal Reset, investors do not need to submit an order for the same security at subsequent auctions. However, a unique option for Municipal Resets is the "Hold" order. Through this mechanism, the owner of a Municipal Reset is communicating the minimum coupon they are prepared to accept to continue owning the bonds. They would submit this through selecting the order type "Hold" and then stipulating the minimum coupon rate in the coupon field. If the auction clears at a coupon below the rate stated on the investor's Hold order, the investor's bonds will be sold. If the auction clears at a coupon rate above the rate stated on the investor's Hold order, the investor will continue to hold the bonds in their account, and the new coupon rate will be applied.
Finally, selling a Municipal Reset may be accomplished on the day of the issue's auction, between the same hours mentioned above. Investors will receive par or the face value when selling their bonds at this time.
Municipal Reset Sell and Hold orders need to be placed with a Fidelity representative at this time and within the above date and time constraints for the order to be considered as part of the auction. Selling a Municipal Reset as part of the auction assures the seller of receiving par value (100% of face value) whereas selling at other times, though possible, does not.
For New Issue Municipal and Corporate bonds, Fixed Rate Capital, and Principal Protected Note offerings, you can submit an indication of interest to let Fidelity know that you want to become eligible to receive an allocation of securities. You submit information such as the brokerage account from which the funds to pay for the securities will be deducted, the security's CUSIP and the maximum number of securities that you would like to receive. By placing an indication of interest, you are participating in a new issue offering.
Before entering an indication of interest, review the preliminary official issue document (prospectus, official statement, offering circular, or term sheet). These documents contain information about the offering and issuer that the underwriter and issuer decided an investor should know in order to make an informed investment decision. You can view preliminary official issue documents by clicking the relevant link next to the issue in question.
Next, sign up for Fidelity Fixed Income Alerts, which will allow Fidelity to send you notification of the price and size of the offering.
On the search results page for a relevant new offering (e.g. municipal bonds, corporate bonds, etc.), click Participate. Select the account from which you want to deduct funds to pay for the securities.
To have the opportunity to participate in a new issue offering, you must enter an indication of interest in which you specify, on the Indicate Interest Page, the maximum number of bonds you are interested in purchasing. In most cases, one bond is equal to $1,000 face value. For example, if you want to buy $5,000 face value of a municipal offering, you enter 5 in the Quantity field.
Once you've entered the quantity, click Preview. To place the indication of interest, click Submit.You receive a notification once an offering for which you've submitted an indication of interest has been priced and the size of offering has been announced by the underwriter. To exercise your purchase opportunity, you must confirm your indication of interest by a stated time.
To confirm an indication of interest, click "Confirm, view, change, or delete" under Confirm Indications of Interest on the Trade Fixed Income page of an account for which you've submitted an indication of interest. Click Confirm next to the issue that you wish to confirm.
If you do not want to purchase the bonds, you must withdraw (delete) any confirmed indication of interest prior to the allocation of bonds. Bonds will not be allocated prior to the stated time.
To delete an indication of interest, click "Confirm, view, change, or delete" under Confirm Indications of Interest on the Trade Fixed Income page of an account for which you've submitted an indication of interest. Click Delete next to the issue that you wish to withdraw.
To change an indication of interest, click Change next to the issue whose quantity you wish to change. On the Enter Indication of Interest page, edit the Quantity and continue by clicking Preview.
Entering an order makes you eligible for but does not guarantee an allocation of bonds. If the offering is oversubscribed (more bonds were requested than available for purchase) and you did not withdraw your order, you may receive a portion of the bonds you requested, or none at all. Fidelity allocates bonds as fairly and equitably as possible.
Once an offering has been allocated, the securities are placed in your account. You can check your account history or positions on Fidelity.com to see if you received an allocation of securities. When you submitted an indication of interest, a notification is sent to the device (e.g., pager) that you registered when you signed up for Fidelity Alerts.
Once securities are allocated, you receive a copy of a written confirmation. In addition, you receive a copy of the issuer's final prospectus and pricing supplement, if available. The official issue document contains the same type of information included in the preliminary document, along with amendments such as the exact size of the offering, the net proceeds going to the issuer, and the concession being given to the underwriter.
If you purchase new issue CDs, you receive a copy of a written confirmation statement as well as a copy of the Certificate of Deposit disclosure statement.