How do I trade bonds?

This guide explains how to buy and sell bonds through Netwealth and external brokers. It details the step-by-step processes involving clients, advisers, Netwealth, trading desks, Citi as sub-custodian, and Euroclear for settlement and safekeeping. It also covers bond approval procedures for external brokers and outlines fees, currency handling, and portfolio updates.

This article covers:

• Buying bonds through Netwealth 
• Selling bonds through Netwealth 
• Buying bonds through an external broker
• Selling bonds through an external broker

How can I buy a bond through Netwealth?

Process summary

Step	Entity	Action
1–2	Client > Netwealth	Adviser proposes bond; Netwealth requests quote.
3–4	Trading desk > Netwealth > Client	Trading desk provides quote; Netwealth relays quote to client.
5	Client Wholesale	Accepts trade; Netwealth reserves funds in client’s Cash Account.
6-7	Netwealth > Citi > Euroclear	Netwealth instructs settlement; Citi settles via Euroclear.
8	Euroclear	Records bond ownership; ensures Delivery Versus Payment (DvP).
9	Citi	Provides safekeeping and manages corporate actions.
10	Netwealth	Updates client portfolio; applies pricing via ICE.

Full Process overview

1. Client: Requests to invest. Adviser proposes bond. Trade Implementation Desk Investment Instruction form submitted to Netwealth.
2. Netwealth (Custodian & Platform): Requests quote from the trading desk.
3. Trading desk (Bond Quote Provider Service):
   1. Provides quote/market info.
   2. Sources bond prices and availability from the wholesale bond market and provides Netwealth with:
      1. Bond Identification
         1. ISIN (International Securities Identification Number),
         2. Issuer name (e.g., US Treasury, corporate issuer),
         3. Bond type (government, corporate, fixed/floating, etc.).
      2. Trade Terms
         1. Price (clean price and dirty price including accrued interest),
         2. Yield to maturity (or yield to call if applicable),
         3. Coupon rate and payment frequency,
         4. Maturity date.
      3. Market Data
         1. Current market liquidity and availability,
         2. Minimum parcel size (e.g., $100,000),
         3. Currency denomination (USD, EUR, GBP, AUD, etc.).
      4. Settlement Instructions
         1. Settlement date (T+2 or as agreed),
         2. Settlement system (Euroclear, as required by Netwealth).
      5. Indicative Costs
         1. Estimated trade value in AUD (including FX conversion if applicable),
         2. Any accrued interest payable at purchase.
4. Netwealth: Communicates quote to the adviser via email. Where applicable, the quote will include the brokerage and foreign exchange conversion fee which will be charged at settlement (step 10).
5. Adviser: Receives confirmation from the client and pends the amount equivalent to the bond's estimated cost in client's cash account.
6. Adviser: Instructs execution to Netwealth, Netwealth directs the sub-custodian to settle the purchase transaction on the settlement date. 
7. Citi (Sub-Custodian / Settlement Agent): Acts as the local settlement agent and sub-custodian and manages the operational link between Netwealth’s accounts and Euroclear’s international settlement system. Settles trade through Euroclear. Citi prepares SWIFT settlement messages to Euroclear, detailing: 
   1. ISIN, quantity, price. 
   2. Counterparty details.
   3. Settlement date and cash account instructions.
8. Euroclear (Global Settlement System / Registry): Records ownership of bonds. Euroclear acts as the International Central Securities Depository (ICSD). Citi instructs Euroclear to perform Delivery Versus Payment (DvP):
   1. Cash moves from Citi’s Euroclear cash account to the buyer.
   2. Bonds move from Citi’s Euroclear securities account to the buyer’s Euroclear account.
9. Citi (Sub-Custodian): Safekeeping and monitoring of settlement completion.
10. Netwealth (Legal Custodian, client reporting, admin): Updates the client’s portfolio to reflect the bond purchase, charges appropriate fees; brokerage) Brokerage fee: 0.20% up to 20bps maximum) and FX conversion (if applicable).

Values for International Bonds are updated daily using the most recent price sourced from a third-party bond pricing service and the exchange rate between AUD and the currency in which the market price of the International Bond is quoted. The value of any foreign currency is based on the exchange rate between AUD and the foreign currency.

How can I sell a bond through Netwealth?

Process summary

Step	Entity	Action
1–2	Client > Netwealth	Client/adviser requests to sell bond; Netwealth requests sell quote from Trading Desk.
3–4	Trading Desk > Netwealth > Client	Trading Desk provides market bid price and liquidity info; Netwealth relays quote to client.
5	Client	Accepts trade; Netwealth reserves funds in client’s Cash Account.
6-7	Netwealth	Confirms sufficient holdings to settle sale and Instructs execution; directs Citi to settle the sale transaction.
8	Citi	Settles trade via Euroclear; delivers bond out of Netwealth’s omnibus account and receives cash.
9	Euroclear	Records transfer of ownership; ensures Delivery Versus Payment (DvP).
10–11	Citi	Confirms settlement completion; passes cash proceeds back to Netwealth.
12–13	Netwealth	Updates client portfolio: credits net cash proceeds (after brokerage and FX) into client’s cash hub.

Full Process overview

1. Client: Requests to sell. Adviser proposes bond disposal to Netwealth.
2. Netwealth (Custodian & Platform): Requests a sell quote from the trading desk.
3. Trading desk (Bond Quote Provider): Provides market bid price/liquidity info for the bond.
4. Netwealth: Communicates the sell quote to the client. Checks with the client whether the bond should be settled in its native currency or in AUD.
5. Client: Accepts the trade and confirms settlement currency.
6. Netwealth: Receives confirmation from the client and pends the amount equivalent to the bond's estimated cost in client's cash account.
7. Instructs execution: Netwealth directs the sub-custodian to settle the sell transaction on the settlement date.
8. Citi (Sub‑Custodian/Settlement Agent): Acts as the local settlement agent and sub-custodian and manages the operational link between Netwealth’s accounts and Euroclear’s international settlement system. Settles the trade through Euroclear. Citi prepares SWIFT settlement messages to Euroclear, detailing:
   1. ISIN, quantity, price.
   2. Counterparty details.
   3. Settlement date and cash account instructions.
9. Euroclear (Global Settlement System / Registry): Records ownership of bonds Euroclear acts as the International Central Securities Depository (ICSD). Citi instructs Euroclear to perform Delivery Versus Payment (DvP):
   1. Cash moves from Citi’s Euroclear cash account to the buyer. 
   2. Bonds move from Citi’s Euroclear securities account to the buyer’s Euroclear account.
10. Citi (Sub‑Custodian): Safekeeping and monitoring of settlement completion.
11. Passes cash proceeds back to Netwealth.
12. Netwealth (Legal Custodian, client reporting, admin): Updates the client’s portfolio to reflect the bond sale.
13. Credits the net cash proceeds (after brokerage, FX conversion if applicable) into the client’s Netwealth Cash Account.

How can I buy a bond through an external broker?

Approved broker: Place trade directly with the broker.

Non approved broker: Must undergo an approval process, which may result in rejection; advisers should allow sufficient processing time for Netwealth to review and confirm the request before proceeding.

Approved bond: Place trade directly with the broker.

Non approved bond: Follow below steps.

Step 1: Adviser to communicate below details with the TRM:

• Bond Name / description
• Denomination (amount)
• ISIN
• Term sheet / or similar details
• Holding statements (if applicable)
• Client details

Step 2: TRM to communicate with [e-mail] and request bond review.

Step 3:  [e-mail] will communicate asset approval to the TRM.

Step 4: TRM to communicate the approval/ rejection to the adviser.

Process summary

Step	Entity	Action
1	Adviser > Broker	Proposes bond and places order with broker.
2–3	Broker > Netwealth	Executes order using Netwealth ID; sends contract notes, trade confirmations, and client allocations to Netwealth (AUD trades to [e-mail], foreign currency trades to [e-mail] by COB T+1 to settle T+5).
4	Netwealth	Completes checks (asset setup, allocation match, available cash), reserves funds in client’s cash account.
5	Netwealth	Instructs purchase; directs sub-custodian to settle the transaction.
6	Citi	Moves funds from Netwealth’s omnibus account to counterparty through Euroclear.
7	Euroclear	Records bond ownership; ensures Delivery Versus Payment (DvP).
8	Citi	Provides safekeeping.
9	Netwealth	Updates client portfolio; applies daily pricing via ICE and FX conversion.

Full Process overview

1. Adviser: Adviser proposes bond and places order with a broker.
2. Broker: Execute order using Netwealth ID for relevant exchange.
3. Adviser sends order details to Netwealth: 
   1. Domestic bonds settling in AUD: contract notes, trade confirmations and client allocations to [e-mail].
   2. International bonds settling in foreign currency: Contract notes, trade confirmations and client allocations to [e-mail] by no later than one business day after the day of the trade (COB by T+1 for Netwealth to settle T+2). Please ensure that the broker has been approved by Netwealth for International bond trading.
4. Netwealth: Complete checks (Asset set up, allocation match, available cash).
5. Netwealth instructs execution, directs the sub-custodian to settle the sell transaction on the settlement date.
6. Citi (Sub-Custodian / Settlement Agent): Citi acts as the local settlement agent and sub-custodian and manages the operational link between Netwealth’s accounts and Euroclear’s international settlement system. Settles trade through Euroclear. Citi prepares SWIFT settlement messages to Euroclear, detailing:
   1. ISIN, quantity, price.
   2. Counterparty details.
   3. Settlement date and cash account instructions.
7. Euroclear (Global Settlement System / Registry): Records ownership of bonds. Euroclear acts as the International Central Securities Depository (ICSD). Citi instructs Euroclear to perform Delivery Versus Payment (DvP):
   1. Cash moves from Citi’s Euroclear cash account to the buyer.
   2. Bonds move from Citi’s Euroclear securities account to the buyer’s Euroclear account.
8. Citi (Sub-Custodian): Safekeeping and monitoring of settlement completion.
9. Netwealth (Legal Custodian, client reporting, admin): Updates the client’s portfolio to reflect the bond purchase, charges appropriate fees; Brokerage fee: 0.20% up to 20bps maximum), FX conversion (if applicable) and Premium asset settlement fee of $25 per client.

Values for International Bonds are updated daily using the most recent price sourced from a third-party bond pricing service and the exchange rate between AUD and the currency in which the market price of the International Bond is quoted. The value of any foreign currency is based on the exchange rate between AUD and the foreign currency.

How do I sell a bond through an external broker?

Approved broker: place trade directly with the broker.

Non approved broker: must undergo an approval process, which may result in rejection; advisers should allow sufficient processing time for Netwealth to review and confirm the request before proceeding.

Process summary

Step	Entity	Action
1	Client > broker	Client/adviser requests to sell bond; Adviser requests sell quote from external broker.
2–3	Broker > Netwealth	Executes order using Netwealth ID; sends contract notes, trade confirmations, and client allocations to Netwealth (AUD trades to [e-mail], foreign currency trades to [e-mail] by COB T+1 to settle T+5).
4-5	Netwealth	Confirms sufficient holdings to settle sale; directs Citi to settle the transaction.
6	Citi > Euroclear	Settles trade via Euroclear; delivers bond out of Netwealth’s omnibus account.
7	Euroclear	Records transfer of ownership; ensures Delivery Versus Payment (DvP).
8	Citi	Confirms settlement completion; passes cash proceeds back to Netwealth.
9	Netwealth	Updates client portfolio: credits net cash proceeds (after brokerage and FX) into client’s cash hub; applies daily pricing via ICE and FX conversion.

Full Process overview

1. Client: Adviser proposes bond disposal.
2. External broker (Bond Quote Provider): Provides market bid price / liquidity info for the bond.
3. Communicates the sell quote to Adviser/Netwealth.
4. Netwealth: Netwealth confirms the client holds sufficient units of the bond to settle the sale
5. Instructs execution, directs the sub-custodian to settle the sell transaction on the settlement date
6. Citi (Sub‑Custodian / Settlement Agent): Acts as the local settlement agent and sub -custodian and manages the operational link between Netwealth’s accounts and Euroclear’s international settlement system. Settles the trade through Euroclear. Citi prepares SWIFT settlement messages to Euroclear, detailing:
   1. ISIN, quantity, price.
   2. Counterparty details.
   3. Settlement date and cash account instructions.
7. Euroclear (Global Settlement System / Registry): Records ownership of bonds. Euroclear acts as the International Central Securities Depository (ICSD). Citi instructs Euroclear to perform Delivery Versus Payment (DvP):
   1. Cash moves from Citi’s Euroclear cash account to the buyer.
   2. Bonds move from Citi’s Euroclear securities account to the buyer’s Euroclear account.
8. Citi (Sub‑Custodian): Safekeeping and monitoring of settlement completion.
9. Passes cash proceeds back to Netwealth.
10. Netwealth (Legal Custodian, client reporting, admin): Updates the client’s portfolio to reflect the bond sale.
11. Credits the net cash proceeds (after brokerage, FX conversion if applicable) into the client’s Netwealth Cash Account.