• The goal is to protect small investors from the possibility of interest falling below zero
  • Requests for Letters made in a non-competitive subscription modality will be declared not presented if the profitability is negative

The Treasury has introduced regulatory changes to protect the small investor against the possibility that shorter-term securities may reach below-zero interest rates at auctions. These Treasury securities are currently approaching zero return in the money markets.

The modification will cause the Treasury Bill requests made in a non-competitive subscription modality to be automatically declared as not presented in the event that the average rate of an auction, when including such requests, turns out to be negative.

Non-competitive requests are those in which the buyer declares the quantity he wants to purchase, but not the minimum profitability he expects. These acquisitions are automatically awarded at the weighted average rate. If the regulations had not been changed, this system would have led small investors to lose money if profitability fell below zero.

This provision will apply to all Treasury Bill auctions held in the remainder of 2014 and January 2015.



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