FROM THE OFFICE OF PUBLIC AFFAIRS

Treasury published in the Federal Register on July 25, 2001, an Advance Notice of Proposed Rulemaking that solicited public comment on alternatives for modifying the Net Long Position (NLP) calculation and the 35 percent award limit in reopening auctions of marketable Treasury securities, which are auctions of additional amounts of previously issued securities.

This change will first be applied to the auction announcement for the 10-year note auction to be held on November 7, which will be the second reopening of 10-year notes originally issued on August 15, 2001. A statement regarding the change in NLP calculation and the specific optional exclusion amount will be included in the auction announcement.

Treasury will soon publish in the Federal Register a modification to its Uniform Offering Circular (31 CFR Part 356) regarding the NLP calculation. The change will allow bidders the option of subtracting an amount for that security, up to approximately 35 percent of the outstanding amount of that security, from the bidder's holdings (including STRIPS principal components of the same security) in the calculation of the NLP. The specific amount of holdings that may be excluded from the NLP calculation will be stated in the Treasury offering announcement for each particular auction. This modification will help ensure continued broad participation in Treasury's reopening auctions.

Once the rule change is published in the Federal Register, the optional exclusion will apply to all reopening auctions of Treasury marketable securities. As with all auctions, bidders should read the applicable offering announcement in conjunction with the Uniform Offering Circular (UOC). If the provisions of an offering announcement are different from the provisions of the UOC, the announcement takes precedence.