Treasury Transfer Plumbing – Why Would DTC FOP Fail but Basic FOP Work?

Hi all,

I recently tried transferring T-Bills between retail brokerage accounts—from IBKR to Schwab—and ran into something unexpected. I submitted the transfer using IBKR’s standard DTC Free of Payment (FOP) option, which I’ve previously used for equities without issue.

In this case, the request generated a reference number and looked “in process,” but it was instantly rejected in the transfer history.

IBKR support told me I had to use the Basic FOP option instead—as if Schwab were a non-DTC or international counterparty.

Has anyone run into this before?

I’m trying to understand what’s going on behind the scenes from a custody/settlement perspective. Is this a quirk of how IBKR handles Treasuries internally, or is there something non-standard in the way Schwab receives fixed income assets?

Any insight into how T-Bills flow between brokers (esp. in retail settings) or what might block a standard DTC FOP would be much appreciated.

Thanks.