Noncompetitive bid

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Noncompetitive bid

In a Treasury auction, bidding for a specific amount of securities at the price, whatever it may turn out to be, equal to the average price of the accepted competitive bids.

Noncompetitive Bid

One of two bidding processes for buying Treasury securities and some other debt securities, in which the investor agrees to purchase a certain number of securities at the average price of all competitive bids over a given time. The noncompetitive bid process allows smaller investors to buy Treasury securities in a market that would otherwise be dominated by wealthy institutional investors. The minimum price in a noncompetitive bid is $10,000.

noncompetitive bid

A method of purchasing U.S. Treasury bills at the weekly public auction without having to submit a price. With a noncompetitive bid, the investor agrees to purchase a given amount of securities (a minimum of $10,000 and a maximum of $500,000) at the average price set at the auction. Noncompetitive bids permit small investors to participate in the auction.

Noncompetitive bid.

Investors who can't or don't wish to meet the minimum purchase requirements for competitive bidding on Treasury bills or notes may enter a noncompetitive bid.

You can invest as little as $1,000 or as much as $5 million in each new issue through Treasury Direct. Treasury Direct is a system that allows you to buy government securities without going through a bank or a brokerage firm.

The Treasury sells T-bills, for example, to all noncompetitive buyers whose bids arrive by the weekly deadline, for a price equal to what competitive bidders pay for that week's issue.

A noncompetitive bid may also be known as a noncompetitive tender.

References in periodicals archive ?
They range from $148 per ton, charged by Jihad Construction Company to handle garbage for Bekaa and Hermel, to $189, charged by Batco and Lavajet in the North and Akkar, and prices higher still for likely noncompetitive bids.
previously awarded seven leases, two through noncompetitive bids, for projects in the Atlantic Ocean, including Cape Wind in Nantucket Sound.
The ratio of government securities offered for competitive and noncompetitive bids is 70 %:30%.
The former Marsh managers are accused of colluding with insurance executives to arrange noncompetitive bids and then conveying these bids to clients under false pretenses.
2) Noncompetitive bidders submit a quantity bid, up to $1 million for bills and $5 million for notes and bonds, but do not specify any yield; the total amount of noncompetitive bids is subtracted from the dollar amount of the security to be auctioned, and what remains is available for competitive bidding.
If the amount of noncompetitive bids is assumed to be $10 million, the quantity available to the two competitive bidders is $40 million.
However, the Back-Zender model assumes that bidders are risk neutral; by definition, risk-neutral bidders do not care about the risk that noncompetitive bids may cause the low-yield points in their steep demand schedules to be realized as auction-clearing yields.
The higher the amount of noncompetitive bids is, the lower the available supply is for competitive bidders and the higher the chances are that the auction will clear at the low-yield (high-price) points of the bidders' steep demand schedules.
Chatterjea and Jarrow (1995) consider the preauction when-issued market and the postauction secondary market but ignore noncompetitive bids and do not allow for bidders (assumed to be risk neutral) to submit demand schedules; instead the bidders are allowed to submit bids only for the entire quantity to be auctioned.
Another is whether the Federal Reserve should preannounce its noncompetitive bids.
MOreover, some large institutions in the New York Federal Reserve District have expressed interest in using this new electronic system to submit noncompetitive bids on behalf of customers.
Finally, any entity or individual may submit noncompetitive bids in an amount up to $1 million.