[Code of Federal Regulations]
[Title 31, Volume 2]
[Revised as of July 1, 2006]
From the U.S. Government Printing Office via GPO Access
[CITE: 31CFR356.20]

[Page 377-378]
 
                  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  How does the Treasury determine auction awards?


    (a) Determining the range and amount of accepted competitive bids--
    (1) Accepting bids. First we accept in full all noncompetitive bids 
that were submitted by the noncompetitive bidding deadline. After the 
closing time for receipt of competitive bids we start accepting those at 
the lowest yields or discount rates through successively higher yields 
or discount rates, up to the amount required to meet the offering 
amount. When necessary, we prorate bids at the highest accepted yield or 
discount rate as described below. If the amount of noncompetitive bids 
would absorb most or all of the offering amount, we will accept 
competitive bids in an amount sufficient to provide a fair determination 
of the yield or discount rate for the securities we are auctioning.
    (2) Accepting bids at the high yield or discount rate. Generally, 
the total amount of bids at the highest accepted yield or discount rate 
exceeds the offering amount remaining after we accept the noncompetitive 
bids and the competitive bids at the lower yields or discount rates. In 
order to keep the total amount of awards as close as possible to the 
announced offering amount, we award a percentage of the bids at the 
highest accepted yield or discount rate. We derive the percentage by 
dividing the remaining par amount needed to fill the offering amount by 
the par amount of the bids at the high yield or discount rate and 
rounding up to the next hundredth of a whole percentage point, for 
example, 17.13%.
    (b) Determining the interest rate for new note and bond issues. We 
set the interest rate at a \1/8\ of one percent increment. If a Treasury 
inflation-protected securities auction results in a negative or zero 
yield, the interest rate will be set at zero, and successful bidders' 
award prices will be calculated accordingly (See Appendix B to this part 
for formulas).
    (1) Single-price auctions. The interest rate we establish produces 
the price closest to, but not above, par when evaluated at the yield of 
awards to successful competitive bidders.
    (2) Multiple-price auctions. The interest rate we establish 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. We round 
price calculations to six decimal places on the basis of price per 
hundred, for example, 99.954321 (See Appendix B to this part).
    (1) Single-price auctions. We award securities to both 
noncompetitive and competitive bidders at the price equivalent to the 
highest accepted discount rate or yield at which bids were accepted. For 
inflation-protected securities, the price for awarded securities is the 
price equivalent to the highest accepted real yield.
    (2) Multiple-price auctions--(i) Competitive bids. We award 
securities to competitive bidders at the price equivalent

[[Page 378]]

to each yield or discount rate at which their bids were accepted.
    (ii) Noncompetitive bids. We award securities to noncompetitive 
bidders at the price equivalent to the weighted average yield or 
discount rate of accepted competitive bids.

[69 FR 45202, July 28, 2004, as amended at 69 FR 53621, Sept. 2, 2004]