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Auctions In Depth

To finance the public debt, Treasury sells bills, notes, bonds, Floating Rate Notes (FRNs), and Treasury Inflation-Protected Securities (TIPS) to institutional and individual investors through public auctions. Treasury auctions occur regularly, and have a set schedule. The auctions are announced in advance in most major newspapers and through press releases.

Treasury accepts bids for marketable securities from institutions and individuals once an auction is announced. Submitters can change a bid until either the noncompetitive or competitive close for that auction. A bid must conform to the terms and conditions stated in the auction announcement and with the auction rules. Treasury reviews bids to ensure that they conform to the rules. Noncompetitive bids postmarked timely will be accepted until issue day. Once an auction closes, no more bids or changes to those bids are allowed. If you bid in an auction and your bid is awarded, you are responsible for full payment.

Bidding in Auctions

Before bidding in a Treasury auction, you must decide to bid noncompetitively or competitively for Treasury bills, notes, bonds, FRNs, or TIPS. Noncompetitive and competitive bidding are detailed below.

Noncompetitive Bidding

  • Most individual investors, who do not consider themselves expert securities traders, bid noncompetitively to ensure that they are awarded the desired amount of the security.
  • Noncompetitive bidders agree to accept the high discount rate, yield, or discount margin set at the auction.
  • Treasury guarantees that you will receive the security for which you bid in the full amount requested up to the maximum bid limit.
  • Noncompetitive bidding is limited to purchases of $5 million per auction. Bidding limits apply cumulatively to all methods that are used for bidding in a single auction.
  • Noncompetitive bids must be received prior to the noncompetitive closing time, which is stated in the auction announcement.  The noncompetitive closing time for bills is normally 11:00 a.m. Eastern Time on auction day and the noncompetitive closing time for notes, bonds, FRNs, and TIPS is normally 12:00 noon Eastern Time on auction day. See Treasury Marketable Securities Offering Announcement Press Releases for specific auction information.

Competitive Bidding

  • Institutional investors and others who are familiar with the securities market generally place their bids competitively.
  • Awards to a single customer may not exceed 35% of the total offering.
  • Competitive bidders specify the discount rate, yield, or discount margin they wish to receive.
  • Competitive bidders may be awarded all, part, or none of the security for which they bid competitively depending on how their bid compares to the discount rate, yield, or spread determined at the auction. If the bid is less than or equal to the high discount rate, yield, or discount margin determined at the auction, they will receive securities; however, the award may be prorated if the bid equals the high rate/yield/discount margin.
  • Competitive bids must be received prior to the competitive closing time, which is stated in the auction announcement.  The competitive closing time for bills is normally 11:30 a.m. Eastern Time on auction day and the competitive closing time for notes, bonds, FRNs, and TIPS is normally 1:00 p.m. Eastern Time on auction day. See Treasury Marketable Securities Offering Announcement Press Releases for specific auction information.

Placing Your Bids

You may bid directly through TreasuryDirect (except for Cash Management Bills), TAAPS (with an established account), or you can make arrangements to purchase securities through a broker, dealer, or financial institution.