One way the federal government finances its activities is by the sale of marketable Treasury bills, notes, bonds, Floating Rate Notes (FRNs), and Treasury Inflation-Protected Securities (TIPS) to the public. Marketable securities can be bought, sold or transferred after they are originally issued. Treasury uses an auction process to sell marketable securities and determine their rate, yield, or discount margin. The value of Treasury marketable securities fluctuates with changes in interest rates and market demand. You can participate in an auction and purchase bills, notes, bonds, FRNs, and TIPS directly from the Treasury or you can purchase them through a bank or broker. Marketable securities held in your account can be sold at current market prices through brokers and many financial institutions.

Treasury annual auction activity:

To participate directly through the U.S. Treasury:

Overview of the Auction Process

Treasury sells marketable securities (bills, notes, bonds, FRNs, and TIPS) through regular public auctions, by which the rate, yield, or discount margin of these securities are determined.

The process begins several days before the scheduled auction when the Treasury announces the details of the upcoming issue, including the amount to be auctioned and the maturity date. When you participate in an auction, you have two bidding options – competitive and noncompetitive. TreasuryDirect allows noncompetitive bidding only. Noncompetitive bidding is limited to purchases of $10 million per auction. Bidding limits apply cumulatively to all methods (TreasuryDirect, banks, and brokers) that are used for bidding in a single auction.

  • With a competitive bid, you specify the rate, yield, or discount margin you will accept.
  • With a noncompetitive bid, you agree to accept the high rate, yield, or discount margin set at auction.

At the close of an auction, Treasury accepts all noncompetitive bids that comply with the auction rules, and then accepts competitive bids in ascending order in terms of their rates, yields, or discount margins (lowest to highest) until the quantity of accepted bids reaches the offering amount. All bidders, noncompetitive and competitive, will receive the same rate, yield, or spread as the highest accepted bid.

How Does It Work?

The auction process is divided into the following three steps.

Who Can Participate?

All auctions are open to the public. The following Treasury services enable various categories of investors to participate directly:

You can read the relevant auction rules and the Treasury Securities Offering Announcement Press Release to determine if you may participate.