Treasury Auction Process:

To start the treasury auction, each participant provides two figures, i.e., quantity and interest, which means that they will be willing to buy X number of bonds if the interest rate established for them is at least Y%. The Treasury sorts the bids according to the level of interest requested, i.e., from the lowest to the highest. The Treasury then begins supplying the bidders who are willing to settle for the lowest interest rates until the full quota of the issue is sold. The interest rate in the treasury auction is determined by the interest rate stated in the last bid that has been accepted.

The participants in the treasury auction whose bids specified interest rates that were too high will not receive any bonds during the auction. The interest rate determined during this process also applies to non-competitive auctions.

Treasury Direct Accounts:

investors who wish to purchase new government bonds on either the non-competitive or competitive bid tracks can open an account at the U.S. Treasury Department. This account is called a Treasury Direct account. It enables a private investor to submit non-competitive purchase bids.