[Code of Federal Regulations]
[Title 31, Volume 2]
[Revised as of July 1, 2002]
From the U.S. Government Printing Office via GPO Access
[CITE: 31CFR356.20]

[Page 363-364]
 
                  TITLE 31--MONEY AND FINANCE: TREASURY
 
         CHAPTER II--FISCAL SERVICE, DEPARTMENT OF THE TREASURY
 
PART 356--SALE AND ISSUE OF MARKETABLE BOOK-ENTRY TREASURY BILLS, NOTES, AND BONDS (DEPARTMENT OF THE TREASURY CIRCULAR, PUBLIC DEBT SERIES NO. 1-93)--Table of Contents
 
         Subpart C--Determination of Auction Awards; Settlement
 
Sec. 356.20  Determination of auction awards.


    (a) Determining the range and amount of accepted competitive bids--
(1) Accepting bids. Determinations of awards in

[[Page 364]]

auctions are made at the Bureau of the Public Debt after the closing 
time for receipt of bids. In determining auction awards, the Bureau of 
the Public Debt first accepts in full all noncompetitive bids received 
by the closing time specified in the offering announcement. Then 
competitive bids are accepted, starting with those at the lowest yields 
or discount rates through successively higher yields or discount rates, 
up to the amount required to meet the public offering. Bids at the 
highest accepted yield or discount rate will be prorated (as described 
in paragraph (a)(2) of this section), if necessary. If the amount of 
noncompetitive bids would absorb most or all of the public offering, 
competitive bids will be accepted in an amount determined by the 
Department to be sufficient to provide a fair determination of the yield 
or discount rate for the securities being auctioned.
    (2) Accepting bids at the high yield or discount rate. When the 
total amount of bids at the highest accepted yield or discount rate 
exceeds the amount of the public offering remaining after acceptance of 
noncompetitive bids and competitive bids at the lower yields or discount 
rates, a percentage of the bids received at the highest accepted yield 
or discount rate will be awarded. This proration is performed for the 
purpose of awarding a par amount of securities close to the public 
offering amount. The percentage is derived by dividing the remaining par 
amount needed to fill the public offering by the par amount of the bids 
recognized at the high yield or rate and rounding up to the next whole 
percentage point.
    (b) Determining the interest rate for new note and bond issues. The 
interest rate established as a result of the auction will be set at a 1/
8 of one percent increment. For single-price auctions, the interest rate 
established produces the price closest to, but not above, par when 
evaluated at the yield awarded to successful competitive bidders. For 
multiple-price auctions, the interest rate established produces the 
price closest to, but not above, par when evaluated at the weighted-
average yield of awards to successful competitive bidders.
    (c) Determining purchase prices for awarded securities. Price 
calculations will be rounded to three decimal places on the basis of 
price per hundred, e.g., 99.954. (See appendix B.)
    (1) Multiple-price auctions--(i) Competitive bids. The price of 
securities awarded to competitive bidders is the price equivalent to 
each yield or discount rate at which their bids were accepted.
    (ii) Noncompetitive bids. The price of securities awarded to 
noncompetitive bidders is the price equivalent to the weighted average 
yield or discount rate of accepted competitive bids.
    (2) Single-price auctions. The price of securities awarded to both 
competitive and noncompetitive bidders is the price equivalent to the 
highest yield or discount rate at which bids were accepted. For 
inflation-indexed securities, the price of such securities will be the 
price equivalent to the highest real yield at which bids were accepted.

[58 FR 414, Jan. 5, 1993, as amended at 62 FR 852, Jan. 6, 1997; 64 FR 
3634, Jan. 25, 1999]