The latest edition of the Federal Reserve Bank of New York’s Current Issues in Economics and Finance, The Treasury Auction Process: Objectives, Structure, and Recent Adaptations, is available.
Authors Kenneth D. Garbade and Jeffrey F. Ingber examine the changes in the Treasury auction process that have taken place in the past fifteen years. The authors describe how several publicly acknowledged violations of Treasury auction rules in 1991 prompted a major reconsideration of the auction process. The key changes that followed include the adoption of the single-price auction format, the introduction of electronic bid submission and processing, and the incorporation of auction deliveries in the daily settlements of the Fixed Income Clearing Corporation.
According to Garbade and Ingber, the changes to the auction process have led to more equitable bidding, faster announcement of auction results, and a safer and more cost-effective settlement process. These adaptations have contributed to the goal of minimizing the cost of financing the national debt.
Kenneth D. Garbade is a vice president in the Capital Markets Function of the Research and Statistics Group; Jeffrey F. Ingber is general manager, Fixed Income Group, Depository Trust and Clearing Corporation.
The Treasury Auction Process: Objectives, Structure, and Recent Adaptations
Two earlier articles in this bank’s Economic Policy Review examined related topics in the historical development of the Treasury market: Origins of the Federal Reserve Book-Entry System and The Institutionalization of Treasury Note and Bond Auctions, 1970-75.
Origins of the Federal Reserve Book-Entry System
The Institutionalization of Treasury Note and Bond Auctions, 1970-75