• The objective is to protect small investors from the possibility that interest falls below zero
  • Requests for letters that are made in a non-competitive subscription mode will be declared not submitted if the profitability is negative

The Public Treasury has introduced regulatory changes to protect the small investor against the possibility that short-term securities reach interest rates below zero in auctions. Currently, these Treasury securities are approaching zero profitability in money markets.

The modification will make requests for Treasury Bills made in a non-competitive subscription mode automatically declared as not submitted in case the average type of an auction, when including such requests, is negative.

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

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

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