WEBVTT
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Good afternoon, and welcome to the US Department
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of the Treasury's Auction Rules workshop.
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Before we begin, I'd like to cover a few logistical items.
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A recording of this presentation will be made available.
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You may access the recording in two ways.
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For the next 90 days,
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you may access a recording using the same link
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you used to access the workshop today.
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It will also be made available
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on the TreasuryDirect website
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in the Auction Regulations section.
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The URL will be provided on the penultimate slide
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of today's presentation.
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Please feel free to ask questions
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throughout the presentation using the Live Event Q&A feature
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on the right side of your application window.
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We will reserve about 10 minutes
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at the end of the presentation to respond to questions.
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Finally, this workshop is completely anonymous.
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Not only are participants not able to see
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or interact with one another,
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but participants are also anonymous to us, the presenters.
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If you submit a question that requires more background
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or discussion, we may ask that you provide your name
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and contact information so we can follow up with you
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after the presentation.
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You can also send questions to us
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using the contact information
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that we'll provide at the end of the presentation.
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And with that, I'll introduce this afternoon's presenters.
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My name is Luisa Jou-Penchev.
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The other two presenters are Kevin Hawkins
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and Chris Allsbrooks.
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Kevin and I are both part
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of the Government Securities Regulations staff
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at Treasury's Bureau of the Fiscal Service.
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GSRS is responsible
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for administering Treasury's auction rules,
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which involves amending the rules as needed
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and providing interpretive guidance to auction participants.
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Chris Allsbrooks is a supervisor in the division
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of Financing Operations of the Wholesale Security Services,
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also within Treasury's Bureau of the Fiscal Service.
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WSS operationally executes
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Treasury's marketable securities auctions
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and assists auction participants in resolving any issues
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that they may encounter during the auction.
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In terms of the agenda for today's presentation,
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Kevin and I will provide an overview
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of Treasury's auction rules, we'll cover the core concepts
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and provide examples of auction-related calculations.
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Chris will then provide some operational tips
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to help auction participants
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to avoid some commonly made mistakes when submitting bids.
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As mentioned earlier,
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please use the Q&A feature to ask questions,
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and we will reserve about 10 minutes at the end
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to respond to question.
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The official title for the auction rules
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is the sale and issue
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of marketable book-entry Treasury bills, notes, and bonds,
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Department of the Treasury Circular, Fiscal Service,
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series number 1-93, and can be found at 31 CFR Part 356.
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Generally, we don't use the full title
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in day-to-day conversations, but we do refer
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to the rules formally as the Uniform Offering Circular.
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Before the UOC was published in the early '90s,
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the rules were published on an individual basis
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as part of the Auctions Offering Circular.
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Treasury decided in the early '90s
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to consolidate these circulars
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into a single Uniform Offering Circular
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that would cover the sale and issuance
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of all marketable Treasury securities.
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So we generally refer to the auction rules as the UOC.
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Again, the auction rules can be found at 31 CFR Part 356.
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It can also be found on our website at treasurydirect.gov.
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The last bullet point is important.
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The UOC and the auction announcement specify the terms
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and conditions of a securities offering.
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If anything in the auction announcement differs
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from the UOC, the auction announcement will control.
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This provides Treasury with the flexibility
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to amend the rules for a particular auction
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in order to meet a specific policy goal
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or for any other reason.
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Now, I'll turn it over to Kevin.
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Thanks, Luisa.
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You'll notice, as we go throughout the presentation,
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that we've included CFR citations
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next to some of the headers,
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which provide the specific location in the UOC,
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where each provision being discussed on that slide
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can be found.
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On the next few slides,
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we'll discuss the participants in Treasury auctions.
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These terms are not mutually exclusive, so as we go along,
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I'll point out where there is some overlap
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between some of the terminology that we're using,
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and as well as some differences between how some
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of these categories are displayed on the offering,
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the auction results press release,
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where they differ from the UOC.
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So the first term that we'll start with here is a bidder,
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and that's simply a person or entity that offers
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to purchase securities in a Treasury auction.
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They can do so either directly,
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which means they have access
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to Treasury's Automated Auction Processing System, or TAAPS,
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and they can submit their own bid directly into the auction,
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or they can do so indirectly
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through a depository institution or a dealer.
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Bidders range in size from individuals
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on the retail side
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to a large complex corporate structures.
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And we further define what a bidder is
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in appendix A of the auction rules.
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And what you'll find there are different categories
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of bidders where some of these designations
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are relationship-based in terms of two entities
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that may think that they are separate bidders,
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but for auction bidding purposes,
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depending on their communications,
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depending on the relationship between the two entities,
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they may actually be considered one bidder
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in a Treasury auction, and that has implications
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for the maximum amount of securities they can be awarded,
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and various other provisions relative to bidders.
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Also, in appendix A is a provision
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by which a bidder can seek to be recognized
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as a separate bidder from a larger corporate
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or partnership structure, and this comes into play
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where you have large complex organizations
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that may have many subsidiaries or affiliates
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that would like to participate independent
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from the larger corporate structure in Treasury auctions
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and be able to take down up to 35%
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of the offering amount on their own.
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Appendix A provides some instructions regarding the process
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for how to seek separate bidder recognition,
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and we'll cover the criteria for being recognized
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as a separate bidder on the next slide.
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So as I mentioned, the instructions
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for how to request separate bidder recognition
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are located in appendix A to Part 356.
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The component which seeks to be recognized separate
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from the larger organizational structure must request
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that recognition in writing
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that goes to Treasury Wholesale Security Services,
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the office that our colleague, Chris Allsbrooks, works in.
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The request must describe the component
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and its position within the corporate
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or partnership structure, including an organizational chart
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to show where it's situated with any organization,
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and provide the required certification language
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which is included in appendix A.
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And basically, what the organizational component
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is attesting to is that it is not exchanging any information
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regarding bidding in Treasury auctions
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with any other component of the organization,
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that this carve-out, as we refer to it sometimes,
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is not being created just to circumvent any bidding
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or award limits.
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Decisions about auction participation
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are made within the component itself,
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and it maintains separate records
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from the larger organization regarding its acquisition
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or disposal of Treasury securities.
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So the next term that we're gonna cover are submitters,
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and submitters are entities
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that submit bids directly into our TAAPS system,
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again, the Treasury Automated Auction Processing System.
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And they could be doing this either for their own account
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or for a customer account.
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And when a submitter is submitting a bid
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for its own account,
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it's referred to in the auction results press release
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as a direct bidder as opposed to someone
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who is bidding indirectly through a submitter,
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which is, as you might assume, an indirect bidder.
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Only depository institutions and dealers
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may submit bids for customers.
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We also permit investment advisors
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to submit bids on behalf of controlled accounts,
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and we'll talk a little bit more about investment advisors
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in another slide.
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So moving on to customers, a customer is simply a bidder,
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it's an indirect bidder,
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it's a bidder that directs a depository institution
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or a dealer to submit a bid on its behalf.
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They're specifying a specific amount of securities
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that they'd like to purchase and a specific auction
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in which they would like to participate.
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The names must be provided either with the bid
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or on a customer list.
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And as you may imagine,
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when submitters are submitting bids on behalf of customers,
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they could have a lengthy list of customers
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on whose behalf they're submitting bids.
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And so the auction rules allow the submitter
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to provide an aggregate bid,
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covering all non-competitive customers.
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However, the submitter must transmit the list
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of individual customer names and their bid amounts
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by the close of business on the auction day.
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And if requested, they may have to submit that customer list
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by the non-competitive clause.
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The customer confirmation requirement applies
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to customers awarded $2 billion or more in a single auction.
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Some of our more seasoned colleagues
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may remember the Salomon Brothers bidding scandal
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back in the early '90s,
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and this requirement was a direct result of that incident
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where Salomon Brothers put in fictitious customer bids
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as a way of circumventing Treasury's 35% award limit.
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After the auction,
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they basically swept those customer accounts
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and amassed the securities in their proprietary account.
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And so what the customer confirmation requires
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is that by 10:00 AM on the business day
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following the auction,
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any customer that is awarded 2 billion or more of securities
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in that auction must independently verify to Treasury
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that they did indeed submit a bid in that auction.
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Submitters are also required to notify their customers
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of the customer confirm reporting requirement
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if they submit a bid on behalf of a customer
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that is awarded in excess of $2 billion.
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So, finally, the last participant
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that we have to introduce our investment advisors,
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and these are entities that have discretion over the bids
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or positions of a different entity,
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which we refer to as a controlled account.
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Investment advisors may bid for the accounts they control
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either in their own name
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or in the name of the controlled account,
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and as we'll explain a little later,
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this has some implications for some of the bidding
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and award limits as they apply to bidders in our auctions.
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Investment advisors must combine their proprietary bids
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and positions with all other competitive bids and positions
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it controls when calculating its net long position,
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and we'll provide a detailed overview
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of the net long position in a few slides as well.
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So we included this next slide here
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as just a graphical representation
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of some of the participants
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that we covered on the previous slide.
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You'll notice there's quite a bit of overlap here,
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and that refers to some of the overlap I mentioned earlier
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in terms of multiple terms applying to a single entity.
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But if we start on the left, we have bidders,
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and within the bidder category, we have customers,
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which, again, these are entities that are submitting bids
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through a third party,
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also referred to on the auction results press release
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as indirect bidders.
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Investment advisors are also customers
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that are submitting bids through a third party.
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Moving to the right, you have direct bidders.
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Now, these are submitters, and you'll see
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that balloon overlaps with the submitter bubble there.
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These are submitters that have direct access
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to the TAAPS system,
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and they're putting bids directly into TAAPS
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for their house account.
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A subset of this group would be the primary dealers
268
00:13:42.480 --> 00:13:46.140
which are designated by the Federal Reserve Bank of New York
269
00:13:46.140 --> 00:13:49.080
as counterparties with which the Fed conducts
270
00:13:49.080 --> 00:13:51.180
its open market operations.
271
00:13:51.180 --> 00:13:54.810
They're also required to bid in Treasury auctions.
272
00:13:54.810 --> 00:13:58.440
And then, finally, submitters out to the right,
273
00:13:58.440 --> 00:13:59.580
you could have a scenario
274
00:13:59.580 --> 00:14:02.495
where an entity does not submit bids for itself,
275
00:14:02.495 --> 00:14:06.753
but serves as a submitter on behalf of its customers.
276
00:14:08.010 --> 00:14:11.460
So with that, I will turn it back over to Luisa,
277
00:14:11.460 --> 00:14:12.960
who will talk a little bit about bidding
278
00:14:12.960 --> 00:14:14.133
in Treasury auctions.
279
00:14:18.360 --> 00:14:19.620
Thanks, Kevin.
280
00:14:19.620 --> 00:14:22.200
So there are two types of bids in Treasury auctions,
281
00:14:22.200 --> 00:14:25.680
non-competitive bids and competitive bids.
282
00:14:25.680 --> 00:14:29.400
So a non-competitive bid is defined in the UOC
283
00:14:29.400 --> 00:14:32.400
as a bid to purchase a stated par amount of securities
284
00:14:32.400 --> 00:14:34.560
at the highest yield, discount rate,
285
00:14:34.560 --> 00:14:38.250
or discount margin awarded to competitive bidders.
286
00:14:38.250 --> 00:14:41.403
Non-competitive bids only require a dollar amount.
287
00:14:42.600 --> 00:14:45.660
The non-competitive bid limit is $10 million,
288
00:14:45.660 --> 00:14:48.000
with a minimum bid of $100,
289
00:14:48.000 --> 00:14:50.703
and bids must be in multiples of $100.
290
00:14:51.900 --> 00:14:54.180
Also, if an investment advisor is bidding
291
00:14:54.180 --> 00:14:56.040
in the name of the controlled account,
292
00:14:56.040 --> 00:14:59.580
it can bid up to the non-competitive maximum
293
00:14:59.580 --> 00:15:00.870
for each controlled account,
294
00:15:00.870 --> 00:15:03.303
but must provide the names of those customers.
295
00:15:05.130 --> 00:15:06.300
Non-competitive bidding
296
00:15:06.300 --> 00:15:08.670
is intended for less sophisticated bidders,
297
00:15:08.670 --> 00:15:11.670
and as such, there is a restriction against bidding
298
00:15:11.670 --> 00:15:15.810
both non-competitive and competitively in the same auction.
299
00:15:15.810 --> 00:15:17.880
You also cannot bid non-competitive
300
00:15:17.880 --> 00:15:19.890
if you have a when-issued, futures,
301
00:15:19.890 --> 00:15:23.103
or forward position in the security being auctioned.
302
00:15:24.480 --> 00:15:26.220
The non-competitive bidding deadline
303
00:15:26.220 --> 00:15:28.620
is stated in the auction announcement.
304
00:15:28.620 --> 00:15:29.910
For bills and FRNs,
305
00:15:29.910 --> 00:15:33.390
the non-competitive bidding deadline is usually 11:00 AM
306
00:15:33.390 --> 00:15:36.423
or one-half hour before the competitive bidding deadline.
307
00:15:37.890 --> 00:15:39.420
For notes, bonds, and TIPS,
308
00:15:39.420 --> 00:15:42.810
the non-competitive bidding deadline is usually noon
309
00:15:42.810 --> 00:15:45.663
or one hour before the competitive bidding deadline.
310
00:15:49.770 --> 00:15:52.650
The second type of bids is competitive bids.
311
00:15:52.650 --> 00:15:55.160
A competitive bid is defined in the UOC
312
00:15:55.160 --> 00:15:58.620
as a bid to purchase a stated par amount of securities
313
00:15:58.620 --> 00:16:02.970
at a specified yield, discount rate, or discount margin.
314
00:16:02.970 --> 00:16:05.490
Competitive bids, in addition to a dollar amount,
315
00:16:05.490 --> 00:16:08.613
require the desire rate, yield, or discount margin.
316
00:16:10.440 --> 00:16:13.680
Bids for bills must show the discount rates bid
317
00:16:13.680 --> 00:16:17.910
to three decimals in 0.005% increments,
318
00:16:17.910 --> 00:16:21.630
and the third decimal must be either a zero or a five,
319
00:16:21.630 --> 00:16:25.503
for example, 3.100 or 3.105.
320
00:16:26.460 --> 00:16:29.043
Discount rates may be positive or zero.
321
00:16:30.720 --> 00:16:32.760
Bids for notes, bonds, TIPS,
322
00:16:32.760 --> 00:16:36.150
and FRNs must show the yield, the real yield,
323
00:16:36.150 --> 00:16:39.270
or discount margin bid expressed to three decimals,
324
00:16:39.270 --> 00:16:42.150
and the third decimal can be zero through nine,
325
00:16:42.150 --> 00:16:45.233
for example, 3.123%.
326
00:16:46.140 --> 00:16:47.070
For notes and bonds,
327
00:16:47.070 --> 00:16:50.280
the yield may be positive or zero.
328
00:16:50.280 --> 00:16:55.020
For TIPS, the real yield may be positive, zero, or negative.
329
00:16:55.020 --> 00:16:58.680
For FRNs, the discount margin may be positive,
330
00:16:58.680 --> 00:17:00.093
zero, or negative.
331
00:17:01.170 --> 00:17:03.810
Competitive bids are submitted via TAAPS,
332
00:17:03.810 --> 00:17:07.170
and they're not allowed in the TreasuryDirect system.
333
00:17:07.170 --> 00:17:08.100
As mentioned before,
334
00:17:08.100 --> 00:17:11.940
a bidder cannot bid both non-competitive and competitively
335
00:17:11.940 --> 00:17:14.103
in the same Treasury securities auction.
336
00:17:18.150 --> 00:17:21.360
On this slide, we want to remind auction participants
337
00:17:21.360 --> 00:17:24.480
of their certification when bidding in an auction.
338
00:17:24.480 --> 00:17:25.770
By bidding in an auction,
339
00:17:25.770 --> 00:17:28.260
bidders and submitters are deemed to have certified
340
00:17:28.260 --> 00:17:31.200
that they are, one, in compliance with the auction rules
341
00:17:31.200 --> 00:17:32.730
and the auction announcements,
342
00:17:32.730 --> 00:17:36.003
and two, providing accurate and complete information.
343
00:17:38.790 --> 00:17:40.140
I'll turn it back to Kevin.
344
00:17:42.540 --> 00:17:43.920
Thanks, Luisa.
345
00:17:43.920 --> 00:17:45.600
On the next few slides, we're gonna talk a little bit
346
00:17:45.600 --> 00:17:49.470
about some of the bid and award limits.
347
00:17:49.470 --> 00:17:53.340
So we have a 35% recognized bid limit,
348
00:17:53.340 --> 00:17:57.630
which basically means a competitive bid at a single yield,
349
00:17:57.630 --> 00:18:01.220
discount rate, or discount margin that exceeds 35%
350
00:18:01.220 --> 00:18:05.040
of the offering amount will be cut back to 35%.
351
00:18:05.040 --> 00:18:07.983
Now, you can have bids that, in aggregate,
352
00:18:08.850 --> 00:18:11.490
multiple bids at different rates or yields that,
353
00:18:11.490 --> 00:18:13.740
in aggregate, exceed 35%.
354
00:18:13.740 --> 00:18:18.740
However, any single bid at a single yield, discount rate,
355
00:18:19.170 --> 00:18:22.350
or discount margin that exceeds 35% of the offering amount
356
00:18:22.350 --> 00:18:23.580
will be cut back.
357
00:18:23.580 --> 00:18:27.990
So as an example, if our offering amount was $20 billion,
358
00:18:27.990 --> 00:18:30.000
35% is the maximum bid amount.
359
00:18:30.000 --> 00:18:33.030
So the most we will recognize at any rate, yield,
360
00:18:33.030 --> 00:18:35.763
or discount margin is $7 billion.
361
00:18:36.990 --> 00:18:39.780
Now, this amount is stated in the auction announcement
362
00:18:39.780 --> 00:18:40.740
as a dollar amount,
363
00:18:40.740 --> 00:18:44.760
so you know exactly what that bid limit is.
364
00:18:44.760 --> 00:18:46.350
Moving on to the award limit,
365
00:18:46.350 --> 00:18:48.393
we also have a 35% award limit,
366
00:18:49.440 --> 00:18:53.250
which basically says that the maximum award to any bidder
367
00:18:53.250 --> 00:18:54.990
is 35% of the offering amount
368
00:18:54.990 --> 00:18:57.630
minus that bidder's net long position.
369
00:18:57.630 --> 00:19:00.030
And we'll talk a little bit about the net long position
370
00:19:00.030 --> 00:19:01.500
in a few slides.
371
00:19:01.500 --> 00:19:03.450
So, again, an example here,
372
00:19:03.450 --> 00:19:05.517
we have an offering amount, again, of 20 billion.
373
00:19:05.517 --> 00:19:09.000
The 35% maximum award limit is 7 billion.
374
00:19:09.000 --> 00:19:12.270
But if a bidder has a net long position of 2 billion,
375
00:19:12.270 --> 00:19:15.120
then the maximum award for that particular bidder
376
00:19:15.120 --> 00:19:16.413
is only 5 billion.
377
00:19:17.340 --> 00:19:19.920
The actual maximum award limit
378
00:19:19.920 --> 00:19:21.660
is stated in these auction announcement,
379
00:19:21.660 --> 00:19:23.700
and again, this is a dollar amount,
380
00:19:23.700 --> 00:19:26.500
we'll show you that on the announcement's press release.
381
00:19:28.170 --> 00:19:30.780
So moving on to the net long position,
382
00:19:30.780 --> 00:19:35.570
the NLP is comprised of two components,
383
00:19:36.720 --> 00:19:40.530
there's a holdings component and a positions component.
384
00:19:40.530 --> 00:19:44.460
Now, the holdings component of the NLP calculation
385
00:19:44.460 --> 00:19:47.070
only comes into play during a reopening.
386
00:19:47.070 --> 00:19:48.930
Obviously, if it's an original issue,
387
00:19:48.930 --> 00:19:50.850
we've not yet issued any of the security,
388
00:19:50.850 --> 00:19:53.253
so you can't actually have any holdings.
389
00:19:54.090 --> 00:19:56.130
But in a reopening, you may have participated
390
00:19:56.130 --> 00:19:58.260
in the original issue offering, or you may have purchased
391
00:19:58.260 --> 00:20:00.240
a security in the secondary market.
392
00:20:00.240 --> 00:20:05.100
And so the NLP in a reopening auction will include
393
00:20:05.100 --> 00:20:08.370
a holdings component which is made up of any holdings
394
00:20:08.370 --> 00:20:11.310
of the same CUSIP as the security being auctioned
395
00:20:11.310 --> 00:20:13.320
or the STRIPS principal component
396
00:20:13.320 --> 00:20:14.943
of the security being auctioned.
397
00:20:16.440 --> 00:20:19.020
And the positions component,
398
00:20:19.020 --> 00:20:21.660
it's comprised of basically three positions,
399
00:20:21.660 --> 00:20:25.380
one, any positions in when-issue trading,
400
00:20:25.380 --> 00:20:27.540
including any when-issue positions
401
00:20:27.540 --> 00:20:29.340
in the STRIPS principal component,
402
00:20:29.340 --> 00:20:32.100
any futures contracts requiring delivery
403
00:20:32.100 --> 00:20:35.340
of the specific security being auctioned,
404
00:20:35.340 --> 00:20:37.830
a single Treasury future,
405
00:20:37.830 --> 00:20:40.260
and any forwards contracts requiring delivery
406
00:20:40.260 --> 00:20:42.660
of the specific security being auctioned
407
00:20:42.660 --> 00:20:46.440
or of the STRIPS principal component of that security.
408
00:20:46.440 --> 00:20:47.490
As I mentioned before,
409
00:20:47.490 --> 00:20:50.460
investment advisors must combine their proprietary bids
410
00:20:50.460 --> 00:20:53.310
and positions with all other competitive bids
411
00:20:53.310 --> 00:20:56.970
and positions it controls when calculating its NLP.
412
00:20:56.970 --> 00:20:59.670
So for an investment advisor bidding on behalf
413
00:20:59.670 --> 00:21:03.030
of controlled accounts when it calculates the NLP,
414
00:21:03.030 --> 00:21:05.502
it must include any of its holdings
415
00:21:05.502 --> 00:21:08.910
and positions in the security as well as any holdings
416
00:21:08.910 --> 00:21:11.820
and positions of the controlled accounts
417
00:21:11.820 --> 00:21:14.703
on whose behalf the investment advisor is bidding.
418
00:21:17.100 --> 00:21:21.210
The next slide here provides a couple scenarios
419
00:21:21.210 --> 00:21:25.380
and explains, if you have an NLP, what to report,
420
00:21:25.380 --> 00:21:29.460
and if you don't have an NLP, how to reflect that as well.
421
00:21:29.460 --> 00:21:33.480
So in the first scenario, if the total of your bids
422
00:21:33.480 --> 00:21:35.940
and your net long position in the security equals
423
00:21:35.940 --> 00:21:38.250
or exceeds the reporting threshold,
424
00:21:38.250 --> 00:21:40.530
you must report your net long position,
425
00:21:40.530 --> 00:21:42.660
which does not include your bids.
426
00:21:42.660 --> 00:21:47.430
So I'll pause here just to reinforce this point here.
427
00:21:47.430 --> 00:21:50.520
When you're determining whether or not you have to report
428
00:21:50.520 --> 00:21:52.200
your net long position,
429
00:21:52.200 --> 00:21:57.200
you combine your NLP with your bids in the auction,
430
00:21:57.570 --> 00:22:01.080
and if that total exceeds the NLP reporting threshold,
431
00:22:01.080 --> 00:22:03.210
then you have to report your NLP.
432
00:22:03.210 --> 00:22:05.130
However, when you report that figure,
433
00:22:05.130 --> 00:22:07.860
you're only reporting the net long position
434
00:22:07.860 --> 00:22:10.053
and not your bids in the auction.
435
00:22:11.250 --> 00:22:14.070
Second scenario, if the total of your bids
436
00:22:14.070 --> 00:22:17.220
in the auction equals or exceeds the reporting threshold,
437
00:22:17.220 --> 00:22:21.090
and you have no position or a net short position,
438
00:22:21.090 --> 00:22:23.103
then you must report a zero.
439
00:22:24.090 --> 00:22:26.607
And then, finally, if the total of your bids and your NLP
440
00:22:26.607 --> 00:22:30.480
and the security are less than the reporting threshold,
441
00:22:30.480 --> 00:22:33.510
then you may either report nothing or leave,
442
00:22:33.510 --> 00:22:35.070
meaning leave the fill blank,
443
00:22:35.070 --> 00:22:36.933
or you report your net long position.
444
00:22:39.090 --> 00:22:44.090
So, here, the NLP threshold is stated
445
00:22:44.400 --> 00:22:46.590
in the auction announcement, again,
446
00:22:46.590 --> 00:22:48.093
as an actual dollar amount.
447
00:22:49.020 --> 00:22:51.840
The amount is typically 35% of the offering amount,
448
00:22:51.840 --> 00:22:53.910
but we may state a different threshold in the announcement.
449
00:22:53.910 --> 00:22:56.730
So it's important to read the announcement.
450
00:22:56.730 --> 00:23:01.530
The 35% is not an established threshold within the UOC,
451
00:23:01.530 --> 00:23:04.879
so it is important to read the offering announcement
452
00:23:04.879 --> 00:23:08.430
to make sure what that number is
453
00:23:08.430 --> 00:23:09.830
for that particular auction.
454
00:23:11.220 --> 00:23:12.360
So moving on to the next slide,
455
00:23:12.360 --> 00:23:15.900
the as of calculation time for the net long position
456
00:23:15.900 --> 00:23:17.130
is one and a half hour prior
457
00:23:17.130 --> 00:23:19.530
to the competitive bidding deadline.
458
00:23:19.530 --> 00:23:22.680
And this is a snapshot, you know, at a moment in time,
459
00:23:22.680 --> 00:23:25.050
it's whatever your position happens to be
460
00:23:25.050 --> 00:23:27.150
at one and a half hour prior to the close.
461
00:23:28.230 --> 00:23:31.500
If you have more than one bid in an auction,
462
00:23:31.500 --> 00:23:33.420
and you must report an NLP or a zero,
463
00:23:33.420 --> 00:23:34.920
you only have to include that figure
464
00:23:34.920 --> 00:23:36.570
with one of your bids.
465
00:23:36.570 --> 00:23:38.430
And if you're a customer,
466
00:23:38.430 --> 00:23:41.640
and you must report your NLP or a zero,
467
00:23:41.640 --> 00:23:42.660
you only have to report
468
00:23:42.660 --> 00:23:45.333
that figure through one DI or dealer.
469
00:23:49.440 --> 00:23:50.910
So in the next slide,
470
00:23:50.910 --> 00:23:53.460
we'll talk a little bit about the optional exclusion,
471
00:23:53.460 --> 00:23:55.590
and this is an amount that comes into play
472
00:23:55.590 --> 00:23:58.350
in reopening auctions.
473
00:23:58.350 --> 00:24:01.830
So in a reopening, you may subtract
474
00:24:01.830 --> 00:24:06.830
the optional exclusion amount from the holdings component
475
00:24:07.560 --> 00:24:10.833
of your net long position calculation.
476
00:24:12.390 --> 00:24:13.530
As you may recall,
477
00:24:13.530 --> 00:24:18.530
the holdings component includes any holdings of the security
478
00:24:19.530 --> 00:24:22.950
as well as any STRIPS principal component of the security.
479
00:24:22.950 --> 00:24:25.110
And what the optional exclusion does is,
480
00:24:25.110 --> 00:24:29.760
it allows an entity that may have acquired securities
481
00:24:29.760 --> 00:24:31.230
in the original issue offering
482
00:24:31.230 --> 00:24:34.530
or may have acquired securities prior to the reopening
483
00:24:34.530 --> 00:24:39.530
in the secondary market to reduce the holdings component
484
00:24:39.990 --> 00:24:43.650
by up to 35% of the original issue,
485
00:24:43.650 --> 00:24:46.500
and thereby allow it to purchase more of the security
486
00:24:46.500 --> 00:24:48.273
in the reopening auction.
487
00:24:49.320 --> 00:24:52.323
If the combined holdings are zero or less,
488
00:24:52.323 --> 00:24:55.140
then the exclusion cannot be taken.
489
00:24:55.140 --> 00:24:56.670
If the exclusion is taken,
490
00:24:56.670 --> 00:24:58.770
then any holdings greater than the exclusion amount
491
00:24:58.770 --> 00:25:01.980
must be included in calculating the NLP.
492
00:25:01.980 --> 00:25:06.980
So for instance, you have 5 billion of the security,
493
00:25:07.770 --> 00:25:10.260
and the optional exclusion is 2 billion.
494
00:25:10.260 --> 00:25:12.540
The additional 3 billion must be included
495
00:25:12.540 --> 00:25:16.020
in your NLP calculation as holdings.
496
00:25:16.020 --> 00:25:17.520
If the exclusion amount is greater
497
00:25:17.520 --> 00:25:18.960
than the combined holdings,
498
00:25:18.960 --> 00:25:21.720
then the combined holdings can be calculated as zero,
499
00:25:21.720 --> 00:25:24.390
but cannot be included in the calculation
500
00:25:24.390 --> 00:25:25.890
as a negative number.
501
00:25:25.890 --> 00:25:27.030
And on the next couple of slides,
502
00:25:27.030 --> 00:25:28.410
we're gonna set up an example
503
00:25:28.410 --> 00:25:31.980
that kind of builds in the optional exclusion
504
00:25:31.980 --> 00:25:34.380
into the NLP calculation.
505
00:25:34.380 --> 00:25:37.770
So for this example, we're going to assume
506
00:25:37.770 --> 00:25:41.430
that we have announced the reopening of a 10-year note.
507
00:25:41.430 --> 00:25:44.280
The amount currently outstanding of that 10-year note
508
00:25:44.280 --> 00:25:45.930
is 15 billion.
509
00:25:45.930 --> 00:25:49.890
The reopening offering amount is an additional 10 billion.
510
00:25:49.890 --> 00:25:53.640
So the NLP exclusion amount is 5.25 billion,
511
00:25:53.640 --> 00:25:57.030
and that's 35% of the original 15 billion
512
00:25:57.030 --> 00:26:00.210
that was previously auctioned.
513
00:26:00.210 --> 00:26:02.490
The 35% award limit
514
00:26:02.490 --> 00:26:06.360
and the NLP reporting threshold are both 3.5 billion,
515
00:26:06.360 --> 00:26:10.443
and that's 35% of the reopening offering amount.
516
00:26:12.060 --> 00:26:14.100
So in the example here,
517
00:26:14.100 --> 00:26:19.100
bidder X has holdings of 4 billion of the same CUSIP,
518
00:26:21.060 --> 00:26:24.000
it has an additional 2.25 billion
519
00:26:24.000 --> 00:26:26.040
of the STRIPS principal component
520
00:26:26.040 --> 00:26:29.073
for a total holdings of 6.25 billion.
521
00:26:30.660 --> 00:26:32.250
You'll recall from the previous slide
522
00:26:32.250 --> 00:26:36.840
that the optional exclusion is 5.25 billion.
523
00:26:36.840 --> 00:26:40.740
So this bidder X chooses to take the optional exclusion
524
00:26:40.740 --> 00:26:45.740
and reduces its holdings from 6.25 to 1 billion.
525
00:26:47.790 --> 00:26:49.350
In addition to its holdings,
526
00:26:49.350 --> 00:26:54.350
the bidder has positions in when-issued market of 2 billion.
527
00:26:54.870 --> 00:26:58.410
So its combined NLP would be the 1 billion
528
00:26:58.410 --> 00:27:01.860
in residual holdings after taking the optional exclusion
529
00:27:01.860 --> 00:27:04.890
plus 2 billion in WI positions,
530
00:27:04.890 --> 00:27:08.373
which equals a total NLP of 3 billion.
531
00:27:09.750 --> 00:27:12.323
So, now, we'll assume that in addition
532
00:27:12.323 --> 00:27:14.460
to having a $3 billion NLP,
533
00:27:14.460 --> 00:27:16.620
let's say they bid for an additional 1 billion,
534
00:27:16.620 --> 00:27:17.520
which would put them over
535
00:27:17.520 --> 00:27:20.793
the 3.5 billion NLP reporting threshold.
536
00:27:22.320 --> 00:27:27.320
But in this example, the 35% award limit is 3.5 billion.
537
00:27:27.870 --> 00:27:32.870
The bidder has an NLP of 3 billion, and therefore,
538
00:27:33.030 --> 00:27:36.420
the maximum award that this bidder can receive
539
00:27:36.420 --> 00:27:38.220
is only a half a billion dollars
540
00:27:38.220 --> 00:27:39.670
in this particular reopening.
541
00:27:43.710 --> 00:27:45.990
So, now, I'll turn it back over to Luisa.
542
00:27:45.990 --> 00:27:48.330
Actually, before we do that,
543
00:27:48.330 --> 00:27:50.717
to just point out some of the figures
544
00:27:53.910 --> 00:27:56.883
we just described in the previous slides,
545
00:27:58.080 --> 00:28:00.390
if you look at the top highlighted section here,
546
00:28:00.390 --> 00:28:02.190
this is a reopening announcement.
547
00:28:02.190 --> 00:28:04.440
We have an offering amount of 50 billion
548
00:28:04.440 --> 00:28:08.283
and an amount currently outstanding of 83 billion.
549
00:28:09.300 --> 00:28:11.160
So if you come down to the second box,
550
00:28:11.160 --> 00:28:14.250
you'll see the maximum award, the maximum recognized bid,
551
00:28:14.250 --> 00:28:16.380
and the NLP reporting threshold
552
00:28:16.380 --> 00:28:19.380
are all 35% of the 50 billion,
553
00:28:19.380 --> 00:28:22.800
so that's how we get to the 17.5 billion there.
554
00:28:22.800 --> 00:28:24.207
And then the NLP exclusion amount,
555
00:28:24.207 --> 00:28:28.920
the 28 billion is 35% of what's currently outstanding.
556
00:28:28.920 --> 00:28:30.360
And now, if you did the math on that,
557
00:28:30.360 --> 00:28:32.730
you'd get slightly higher,
558
00:28:32.730 --> 00:28:34.380
I think probably about 29 billion,
559
00:28:34.380 --> 00:28:37.230
if you just took 35% of the 83 billion.
560
00:28:37.230 --> 00:28:40.140
However, when calculating the optional exclusion,
561
00:28:40.140 --> 00:28:44.730
we don't include in that any amounts, any SOMA holdings.
562
00:28:44.730 --> 00:28:47.730
So we would back out any SOMA holdings,
563
00:28:47.730 --> 00:28:52.260
and then take 35% of the amount currently outstanding,
564
00:28:52.260 --> 00:28:54.120
representing what's available to the public,
565
00:28:54.120 --> 00:28:57.720
and then that's how we arrive at the 28 billion
566
00:28:57.720 --> 00:28:59.640
for the optional exclusion.
567
00:28:59.640 --> 00:29:02.190
So with that, I'll turn it back over to Luisa,
568
00:29:02.190 --> 00:29:03.023
who'll talk a little bit
569
00:29:03.023 --> 00:29:05.160
about how Treasury determines auction awards.
570
00:29:08.880 --> 00:29:09.720
Thanks, Kevin.
571
00:29:09.720 --> 00:29:11.070
So for the next three slides,
572
00:29:11.070 --> 00:29:14.010
I'll cover the determination of auction awards.
573
00:29:14.010 --> 00:29:16.530
So Treasury auctions are single-price auctions,
574
00:29:16.530 --> 00:29:18.780
and that means that all successful bidders
575
00:29:18.780 --> 00:29:21.480
pay the same price regardless of the rate,
576
00:29:21.480 --> 00:29:23.940
yield, or discount margin they bid.
577
00:29:23.940 --> 00:29:25.680
Awards are at the price equivalent
578
00:29:25.680 --> 00:29:27.900
to the highest accepted discount rate, yield,
579
00:29:27.900 --> 00:29:31.110
or discount margin at which bids are accepted.
580
00:29:31.110 --> 00:29:33.540
For TIPS, awards are at the price equivalent
581
00:29:33.540 --> 00:29:35.763
to the highest accepted real yield.
582
00:29:39.101 --> 00:29:40.320
For the award process,
583
00:29:40.320 --> 00:29:44.280
Treasury accepts all non-competitive bids first,
584
00:29:44.280 --> 00:29:46.770
then Treasury accepts non-competitive bids
585
00:29:46.770 --> 00:29:48.780
at the lowest yield, discount rate,
586
00:29:48.780 --> 00:29:52.260
or discount margin up to the amount required to meet
587
00:29:52.260 --> 00:29:53.820
the offering amount.
588
00:29:53.820 --> 00:29:56.700
Then we prorate bids at the highest accepted yield,
589
00:29:56.700 --> 00:29:58.950
discount rate, or discount margin.
590
00:29:58.950 --> 00:30:00.210
We'll derive the percentage
591
00:30:00.210 --> 00:30:02.730
by dividing the remaining par amounts
592
00:30:02.730 --> 00:30:06.030
needed to fill the offering by the par amount of bids
593
00:30:06.030 --> 00:30:09.090
at the high rate, yield, or discount margin.
594
00:30:09.090 --> 00:30:12.210
Then we round up to the next hundredth of a whole percent,
595
00:30:12.210 --> 00:30:16.470
for example, 17.13%.
596
00:30:16.470 --> 00:30:19.890
Submitters and intermediaries prorate awards to customers
597
00:30:19.890 --> 00:30:22.890
that bid at the highest accepted yield, discount rate,
598
00:30:22.890 --> 00:30:24.033
or discount margin.
599
00:30:28.470 --> 00:30:31.650
This sample auction calculation is a visual representation
600
00:30:31.650 --> 00:30:34.890
of the award process that I just described.
601
00:30:34.890 --> 00:30:36.030
In this sample auction,
602
00:30:36.030 --> 00:30:37.780
the offering amount is $10 billion.
603
00:30:38.820 --> 00:30:41.850
We'll start by accepting the non-competitive bids first.
604
00:30:41.850 --> 00:30:45.060
So the $2 billion are accepted in full,
605
00:30:45.060 --> 00:30:49.050
that leaves $8 billion for competitive bidders.
606
00:30:49.050 --> 00:30:51.840
Competitive bids are accepted at the lowest rate,
607
00:30:51.840 --> 00:30:54.270
and we'll work our way up through the rates
608
00:30:54.270 --> 00:30:56.820
until we reach the offering amount.
609
00:30:56.820 --> 00:31:00.750
At the lowest rates of 0.621%,
610
00:31:00.750 --> 00:31:02.910
the amount bid was half a billion dollars,
611
00:31:02.910 --> 00:31:06.960
which brings us to a total amount awarded of 2.5 billion,
612
00:31:06.960 --> 00:31:09.960
leaving 7.5 billion.
613
00:31:09.960 --> 00:31:11.850
We'll continue moving up the rates
614
00:31:11.850 --> 00:31:16.140
until we get to 0.625%,
615
00:31:16.140 --> 00:31:18.483
where we see the amount needed of $0.
616
00:31:20.700 --> 00:31:25.500
That 0.625% is the high rate or stop-out rate,
617
00:31:25.500 --> 00:31:27.933
the rate at which the offering amount is met.
618
00:31:29.220 --> 00:31:33.390
At this rate, the amount bid of 2.5 billion
619
00:31:33.390 --> 00:31:36.870
exceeded the amount it needed to fill the offering amount.
620
00:31:36.870 --> 00:31:39.270
Therefore, we will prorate the bids
621
00:31:39.270 --> 00:31:41.760
at the stop-out by taking the 1 billion
622
00:31:41.760 --> 00:31:43.860
it needed to fill the offering,
623
00:31:43.860 --> 00:31:47.880
divide it by the amount of bids received at the rate,
624
00:31:47.880 --> 00:31:52.380
in this case, 2.5 billion, that gives us 40%.
625
00:31:52.380 --> 00:31:55.380
Bids at the stop-out will be prorated at 40%
626
00:31:55.380 --> 00:31:56.283
of what you bid.
627
00:31:58.290 --> 00:32:00.600
Bids below the stop-out are awarded in full,
628
00:32:00.600 --> 00:32:02.793
so that includes the non-competitive bids.
629
00:32:04.290 --> 00:32:07.080
Again, bids at the stop-out are prorated,
630
00:32:07.080 --> 00:32:09.813
and bids above the stop-out are not awarded.
631
00:32:15.120 --> 00:32:17.970
On this slide, this is a slide,
632
00:32:17.970 --> 00:32:19.920
it's an example of the competitive results
633
00:32:19.920 --> 00:32:21.510
for a bill auction.
634
00:32:21.510 --> 00:32:24.810
To just highlight a few items when looking at these,
635
00:32:24.810 --> 00:32:27.840
the high rates is the highest accepted rate
636
00:32:27.840 --> 00:32:30.180
at which the offering amount is filled,
637
00:32:30.180 --> 00:32:33.000
or as you heard it referred to on the previous slide,
638
00:32:33.000 --> 00:32:34.293
the stop-out rate.
639
00:32:35.340 --> 00:32:38.490
Allotted at high is the proration percentage,
640
00:32:38.490 --> 00:32:42.153
so bids at the stop-out are prorated by this percentage.
641
00:32:43.170 --> 00:32:46.323
The price is the price that all successful bidders will pay.
642
00:32:47.640 --> 00:32:51.600
The investment rate is the equivalent coupon issue yield,
643
00:32:51.600 --> 00:32:54.690
and it is used to help compare bills
644
00:32:54.690 --> 00:32:58.113
which don't pay interest to interest-bearing securities.
645
00:32:59.730 --> 00:33:00.840
In the next section,
646
00:33:00.840 --> 00:33:03.750
you'll see the competitive and non-competitive bid amounts
647
00:33:03.750 --> 00:33:06.240
that were tendered and accepted,
648
00:33:06.240 --> 00:33:08.730
there's also a FIMA non-competitive,
649
00:33:08.730 --> 00:33:09.870
which are bids submitted
650
00:33:09.870 --> 00:33:12.210
by the Federal Reserve Bank of New York
651
00:33:12.210 --> 00:33:16.050
on behalf of the foreign international monetary authorities.
652
00:33:16.050 --> 00:33:18.420
As you can see, the non-competitive bids,
653
00:33:18.420 --> 00:33:21.813
including the FIMA non-competitive, were accepted in full.
654
00:33:22.710 --> 00:33:23.700
For competitive,
655
00:33:23.700 --> 00:33:26.580
only a portion of the amount tendered was accepted
656
00:33:26.580 --> 00:33:30.003
because only bids at or below the stop-out are accepted.
657
00:33:32.220 --> 00:33:33.780
On the last highlighted section,
658
00:33:33.780 --> 00:33:36.990
you can see here a breakdown of how much was tendered
659
00:33:36.990 --> 00:33:39.723
and accepted for each category of bidder.
660
00:33:40.740 --> 00:33:43.740
The three categories are primary dealer, direct bidder,
661
00:33:43.740 --> 00:33:47.130
and indirect bidder that we covered earlier
662
00:33:47.130 --> 00:33:48.990
in today's presentation.
663
00:33:48.990 --> 00:33:50.247
And with that, I'll turn it over to Chris,
664
00:33:50.247 --> 00:33:52.773
who will provide some operational tips.
665
00:33:56.850 --> 00:33:58.740
Thank you, Luisa.
666
00:33:58.740 --> 00:34:01.950
Treasury auction staff monitor every auction.
667
00:34:01.950 --> 00:34:04.530
Many of the items I'll touch on have already been mentioned,
668
00:34:04.530 --> 00:34:07.263
and I want to share how we apply them during auctions.
669
00:34:08.250 --> 00:34:11.190
Bidding incidents typically involve data entry errors
670
00:34:11.190 --> 00:34:12.633
or customer bid issues.
671
00:34:13.470 --> 00:34:16.980
Common bidding issues may include misstated par amounts
672
00:34:16.980 --> 00:34:19.143
or rate, yield, and discount margins.
673
00:34:20.700 --> 00:34:21.960
Submitters should confirm
674
00:34:21.960 --> 00:34:24.030
that customers have provided complete
675
00:34:24.030 --> 00:34:27.870
and current information, including full legal name,
676
00:34:27.870 --> 00:34:30.750
bidder identification number, or BIN,
677
00:34:30.750 --> 00:34:32.493
and complete trust information.
678
00:34:33.870 --> 00:34:37.080
While reviewing bids during auction and post-auction,
679
00:34:37.080 --> 00:34:39.330
we verify that we have complete names
680
00:34:39.330 --> 00:34:41.523
and can accurately identify the customer.
681
00:34:42.600 --> 00:34:45.750
If information is missing or incorrect,
682
00:34:45.750 --> 00:34:47.850
we may need to reach out to the submitter.
683
00:34:48.930 --> 00:34:50.580
Based on this information,
684
00:34:50.580 --> 00:34:53.640
this may determine if the bids are accepted as is
685
00:34:53.640 --> 00:34:56.403
or if post-auction bid adjustments will be required.
686
00:34:57.780 --> 00:35:01.018
As the submitter, you must ask your customer
687
00:35:01.018 --> 00:35:03.540
if they have a BIN assigned by Treasury,
688
00:35:03.540 --> 00:35:04.983
and submit it with the bid.
689
00:35:06.150 --> 00:35:09.990
If you are the customer, you must provide the BIN
690
00:35:09.990 --> 00:35:13.143
and the exact name assigned to the BIN to the submitter.
691
00:35:14.850 --> 00:35:17.910
For trust or other fiduciary estates,
692
00:35:17.910 --> 00:35:20.790
submitters must provide the full name
693
00:35:20.790 --> 00:35:23.703
or title of the trustee or fiduciary,
694
00:35:24.720 --> 00:35:27.060
a reference to the document creating the trust
695
00:35:27.060 --> 00:35:30.273
or fiduciary estate with the date of execution,
696
00:35:31.260 --> 00:35:34.260
and the employer identification number,
697
00:35:34.260 --> 00:35:36.390
not the Social Security number,
698
00:35:36.390 --> 00:35:38.583
of the trust or fiduciary estate.
699
00:35:45.090 --> 00:35:46.290
As previously mentioned,
700
00:35:46.290 --> 00:35:48.570
it is important to understand affiliations
701
00:35:48.570 --> 00:35:51.033
and categories of eligible bidders.
702
00:35:51.990 --> 00:35:53.430
When monitoring bids,
703
00:35:53.430 --> 00:35:56.550
multiple entities may be considered a single bidder,
704
00:35:56.550 --> 00:35:58.110
even if they have different names
705
00:35:58.110 --> 00:36:00.393
and tax identification numbers.
706
00:36:01.620 --> 00:36:05.070
If we see two or more bids that may share a relationship,
707
00:36:05.070 --> 00:36:06.930
such as married couples
708
00:36:06.930 --> 00:36:09.543
and/or family members living in the same household,
709
00:36:10.500 --> 00:36:13.230
as well as customers and business
710
00:36:13.230 --> 00:36:16.110
where they have more than 50% controlling interest,
711
00:36:16.110 --> 00:36:18.860
we may reach out to the submitter for more information.
712
00:36:19.830 --> 00:36:22.503
And here's an example of how we applied this to bids.
713
00:36:23.640 --> 00:36:25.170
During an auction,
714
00:36:25.170 --> 00:36:29.040
we received separate $10 million non-competitive bids
715
00:36:29.040 --> 00:36:32.400
for Jack Jacobson and Jill Jacobson,
716
00:36:32.400 --> 00:36:34.983
both at 123 Main Street, DC.
717
00:36:36.420 --> 00:36:39.420
In the same auction, we see a competitive bid
718
00:36:39.420 --> 00:36:43.323
for Jacobson Industries at 123 Main Street, DC.
719
00:36:44.430 --> 00:36:45.900
We can link these bids together
720
00:36:45.900 --> 00:36:47.883
by the name and the addresses.
721
00:36:49.470 --> 00:36:50.850
When we call the submitter,
722
00:36:50.850 --> 00:36:53.040
we would ask for the relationship between Jack
723
00:36:53.040 --> 00:36:54.183
and Jill Jacobson.
724
00:36:55.200 --> 00:36:57.840
If married, Jack and Jill's bids combined
725
00:36:57.840 --> 00:37:01.470
would exceed the $10 million non-competitive bid limit
726
00:37:01.470 --> 00:37:04.113
and would be cut back to the $10 million total.
727
00:37:05.730 --> 00:37:08.880
If adult siblings are living in the same household,
728
00:37:08.880 --> 00:37:10.413
the bids would be accepted.
729
00:37:12.660 --> 00:37:14.880
Next, we would ask for the percent ownership
730
00:37:14.880 --> 00:37:16.950
of Jacobson Industries.
731
00:37:16.950 --> 00:37:19.770
If Jack and/or Jill own more than 50%
732
00:37:19.770 --> 00:37:23.760
of Jacobson Industries, these bids would be linked together,
733
00:37:23.760 --> 00:37:25.110
and the non-competitive bid
734
00:37:25.110 --> 00:37:26.810
would be removed from the auction.
735
00:37:29.370 --> 00:37:31.230
As mentioned on the previous slide,
736
00:37:31.230 --> 00:37:33.660
trusts are only considered separate bidder
737
00:37:33.660 --> 00:37:36.390
if they have an employer identification number,
738
00:37:36.390 --> 00:37:37.923
not a Social Security number.
739
00:37:39.240 --> 00:37:42.300
During an auction, if we received a customer bid
740
00:37:42.300 --> 00:37:47.070
for Bob Brown Trust date to date 01/01/'20
741
00:37:47.070 --> 00:37:52.070
with an EIN number of 123456789,
742
00:37:52.710 --> 00:37:55.020
and a separate bid for Bob Brown,
743
00:37:55.020 --> 00:37:56.470
these bids would be separate.
744
00:37:57.540 --> 00:38:01.020
If the same trust bid has a Social Security number,
745
00:38:01.020 --> 00:38:03.720
it would be combined with the individual customer bid.
746
00:38:06.900 --> 00:38:09.360
Submitters are required to maintain current
747
00:38:09.360 --> 00:38:11.160
and accurate customer information
748
00:38:11.160 --> 00:38:13.770
in their TAAPS customer database,
749
00:38:13.770 --> 00:38:16.167
this includes complete customer names
750
00:38:16.167 --> 00:38:19.500
and bidder identification numbers, if applicable,
751
00:38:19.500 --> 00:38:22.143
as well as any updates to customer information.
752
00:38:23.250 --> 00:38:26.100
It is also important for submitters to receive, I'm sorry,
753
00:38:26.100 --> 00:38:28.170
to review their customer single bid limits
754
00:38:28.170 --> 00:38:29.943
by auction type periodically.
755
00:38:31.710 --> 00:38:34.380
A commonly made mistake in FRN auctions
756
00:38:34.380 --> 00:38:37.200
is when the discount margins are entered incorrectly
757
00:38:37.200 --> 00:38:38.373
as basis points.
758
00:38:39.630 --> 00:38:41.400
When entering bids in TAAPS,
759
00:38:41.400 --> 00:38:43.920
the competitive bid must show the discount margin
760
00:38:43.920 --> 00:38:47.790
expressed as a percentage with three decimal points,
761
00:38:47.790 --> 00:38:51.773
for example, 0.29%.
762
00:38:52.800 --> 00:38:56.280
And as a final note, we encourage submitters to review bids
763
00:38:56.280 --> 00:38:59.283
for accuracy before and after submission.
764
00:39:00.330 --> 00:39:01.650
Common entry concerns
765
00:39:01.650 --> 00:39:04.560
may include inaccurate customer information
766
00:39:04.560 --> 00:39:08.280
or incomplete names, misstated pars,
767
00:39:08.280 --> 00:39:12.390
such as entering a bid for 500,000 instead of 500 million,
768
00:39:12.390 --> 00:39:13.923
as directed by the customer,
769
00:39:15.390 --> 00:39:18.750
incorrect rate, yields, and discount margins,
770
00:39:18.750 --> 00:39:20.910
this can affect if the security will be awarded
771
00:39:20.910 --> 00:39:24.690
to the customer after the auction closes, and finally,
772
00:39:24.690 --> 00:39:27.303
confirming bids are placed in the correct auction.
773
00:39:29.160 --> 00:39:31.210
And now, I'll turn it back over to Luisa.
774
00:39:36.300 --> 00:39:37.620
Thanks, Chris.
775
00:39:37.620 --> 00:39:40.500
So on this slide, we've included a few helpful links
776
00:39:40.500 --> 00:39:42.060
to our TreasuryDirect website
777
00:39:42.060 --> 00:39:44.640
where you can access the auction rules,
778
00:39:44.640 --> 00:39:46.620
subscribe to our mailing list,
779
00:39:46.620 --> 00:39:48.720
our auction and auction-related rules,
780
00:39:48.720 --> 00:39:51.360
our auction information handling guidelines,
781
00:39:51.360 --> 00:39:54.450
and also not necessarily related to auctions,
782
00:39:54.450 --> 00:39:56.520
but we've also included a link
783
00:39:56.520 --> 00:39:59.223
to the Government Securities Act regulations.
784
00:40:00.090 --> 00:40:01.800
And just to provide a quick plug,
785
00:40:01.800 --> 00:40:05.310
we also host a large position reporting rules workshop.
786
00:40:05.310 --> 00:40:07.170
So if that's something you're interested in,
787
00:40:07.170 --> 00:40:09.780
please make sure to sign up for the mailing list,
788
00:40:09.780 --> 00:40:11.970
and you'll get the announcement for that workshop,
789
00:40:11.970 --> 00:40:14.703
which will likely be sometime next summer.
790
00:40:16.560 --> 00:40:20.340
The next link is to the Domestic Finance website,
791
00:40:20.340 --> 00:40:22.020
which is the US Treasury website
792
00:40:22.020 --> 00:40:24.240
that's relevant to auctions.
793
00:40:24.240 --> 00:40:27.663
And the last link is a link to the FRB New York website.
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On this final slide, we've included our contact information.
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So if you need to contact Kevin or myself
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at the Government Securities Regulations staff,
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you can contact us directly at 202-504-3632
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or our group inbox at govsecreg@fiscal.treasury.gov.
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To contact Chris Allsbrooks
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with the Wholesale Security Services,
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the number is 202-504-3550.
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The help desk number is 866-691-3770,
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or their group inbox at auctions@fiscal.treasury.gov.
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And with that, we'd like to thank everyone for attending,
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and have a great rest of your afternoon.