This page covers questions and details of who may bid for Treasury marketable securities, especially larger organizations and bidders who must report their long position.
Who may bid for Treasury marketable securities?
Treasury auction rules specify this list of eligible bidders:
- Individuals
- Corporations
- Partnerships
- Government-related entities
- Trust or other fiduciary estates
- Foreign and International Monetary Authorities
Treasury also has an "other bidder' category. Some institutions or organizations with a unique IRS-assigned employer identification number (EIN) may be an "other bidder”. This includes:
- Associations
- Religious organizations, such as a church, mosque, synagogue
- Clubs
- Unions
- Universities
See the Uniform Offering Circular, Appendix A, Bidder Categories
Bids from a depository institution or a government securities dealer: Are each of my customers considered a separate bidder?
Yes. Each customer is a separate bidder. The auction rules, such as bidding and award limits, apply separately to each.
All bids must be listed separately and include the bidder’s name, bid amount(s), and rate(s) or yield(s), if bidding competitively. Trust bids must also include the name or title of the trustee or fiduciary, the date of execution, and the employer identification number (EIN). Trust bids are not considered separate if they do not include an EIN.
See the Uniform Offering Circular §356.2
May a large corporation or partnership be separated into more than one component to bid for Treasury securities?
Maybe. If a component within a corporation or partnership meets certain criteria, Treasury may recognize that component as a separate bidder from its large corporate or partnership structure.
The component must meet these four criteria:
- The component must not exchange information related to bidding in Treasury auctions with any other component in the corporation or partnership.
- The component must not be created for the purpose of circumventing the Treasury auction bidding or award limitations.
- The component's employees must make their own decisions to buy or sell Treasury securities.
- The component must maintain its own, separate records regarding transactions in Treasury securities.
See the Uniform Offering Circular, Appendix A, Bidder Categories
How does a component get recognized as a separate bidder?
If it meets the four criteria in the previous answer, the component must
- ask Treasury for separate-bidder recognition
- describe the component and its position in the corporate or partnership structure
- provide the required certification as spelled out in the Uniform Offering Circular, Appendix A
What is a net long position and who must report it?
This doesn't apply to non-competitive bidders.
Anyone who bids competitively must consider their long position with regard to the securities involved in a specific auction.
A net long position refers to the amount of the relevant securities that you already own. This includes your holdings, certain trading positions, and any futures or forward contracts that require delivery of the security being auctioned (including any STRIPS principal components).
Each auction announcement includes a net long position [NLP] reporting threshold.
If the sum of your net long position and your competitive bids in a particular auction equals or exceeds the net long position reporting threshold specified in the auction announcement, you must report your net long position with one of your bids.
You must calculate your net long position as of one half-hour before the competitive bidding deadline. The sum of your net long position plus the total of your auction awards may not exceed 35 percent of the offering amount.
For more information on how to report your net long position, see the Uniform Offering Circular §356.13
