How to buy and sell bonds

You can buy bonds only from a registered investment representativeInvestment representative See Dealing representative.+ read full definition (sometimes known as a stockbroker). InvestmentInvestment An item of value you buy to get income or to grow in value.+ read full definition representatives work for investment firms (sometimes known as brokerage firms), which are also registered. You can buy and sell bonds through a full-service firm or a discount brokerageDiscount brokerage A brokerage firm that charges lower fees to buy and sell investments, as opposed to a full-service brokerage. Does not provide investment advice.+ read full definition firm.

Anyone selling securities or offering investment advice must be registered with their provincial securities regulatorSecurities regulator A government agency that enforces the securities act in jurisdiction it has authority over. This act is made up of laws that establish rules for issuing and trading securities. The Ontario Securities Commission is the securities regulator for Ontario.+ read full definition, unless they have an exemption. Check registrationRegistration A requirement for any person or company trading investments or providing advice in Canada. Securities industry professionals are required to register with the securities regulator in each province or territory where they do business.+ read full definition through the Ontario Securities CommissionOntario Securities Commission An independent Crown corporation that is responsible for regulating the capital markets in Ontario. Its mandate is to provide protection to investors from unfair, improper or fraudulent practices, to foster fair and efficient capital markets and confidence in capital markets, and to contribute to the stability of the financial system and the reduction of systemic…+ read full definition or Canadian Securities Administrators. Learn more about working with an advisor.

1. Open an account

You can open an investment accountAccount An agreement you make with a financial institution to handle your money. You can set up an account for depositing and withdrawing, earning interest, borrowing, investing, etc.+ read full definition through a full-service or discountDiscount When something sells for less than its normal price.+ read full definition brokerage firmBrokerage firm A company, corporation, partnership, or other organization that buys and sells stocks, bonds and other investments for investors.+ read full definition. You may also choose to open a registered account, such as an RRSPRRSP See Registered Retirement Savings Plan.+ read full definition, a TFSATFSA See Tax-Free Savings Account.+ read full definition or a RRIFRRIF See Registered Retirement Income Fund.+ read full definition.

Learn more about what you need to open an investment account.

2. Place your order

You can give your investment firm instructions to buy or sell a bondBond A kind of loan you make to the government or a company. They use the money to run their operations. In turn, you get back a set amount of interest once or twice a year. If you hold bonds until the maturity date, you will get all your money back as well. If you sell…+ read full definition in person, by phone or online. This is called placing your order. Tell the investment firm the name and amount of the bond you want to buy or sell. If it’s a new issue of bonds, the price is often the face valueFace value What you pay to buy a bond or some other investment.+ read full definition. Otherwise, you’ll buy or sell a bond at the current market priceMarket price The amount you must pay to buy one unit or one share of an investment. The market price can change from day to day or even minute to minute.+ read full definition.

Once your order is filled, the investment firm will send you a record of the transactionTransaction The process where one person or party buys goods or services from another for money. Examples include taking money out of an account, buying something with a credit card or taking out a loan.+ read full definition by e-mail, fax or mail. It will confirm:

  • what you bought or sold,
  • the price you paid or received, and
  • any accrued interest on the bond.

Key point

When you buy or sell a bond, the commission is built into its price. The investment firm marks up the price of the bond slightly to cover the costs of selling the bond.

Last updated