FROM THE OFFICE OF PUBLIC AFFAIRS

Treasury announced the publication in the Federal Register of an Advance Notice of Proposed Rulemaking (ANPR) that solicits public comments on potential modifications to Treasury's Uniform Offering Circular (31 CFR 356) to the calculation of the net long position and the 35 percent award limit in marketable Treasury securities auctions.

The 35 percent rule limits auction awards for any one competitive bidder to 35 percent of the total amount offered to the public less the bidder's net long position (NLP) in a particular auction. A key component of the 35 percent award limit is the NLP calculation. The NLP is the amount of a security that a bidder has obtained, or has arranged to obtain, outside of the auction. If a bidder has a reportable NLP, it is subtracted from the 35 percent award limit in determining the bidder's maximum award amount.

The purpose of any such modifications would be to ensure active and wide participation in Treasury auctions, particularly in reopenings, which are auctions of additional amounts of previously issued securities. Treasury is examining whether the current method for calculating the NLP unnecessarily reduces participation in reopenings by bidders who already have significant amounts of the security issued in previous auctions. Treasury invites comments on alternatives to NLP reporting and the 35 percent award limit. Of particular interest are comments on an alternative that would permit bidders in reopenings to exclude a portion of their current holdings of the security being auctioned from their NLP calculation.

Until Treasury makes a decision regarding modifications to the calculation of the NLP and auction award limit, competitive bidders in 4-week bill auctions will be required to report their NLP if they meet or exceed the reporting threshold. Treasury will not include NLPs in the calculation of the 35 percent award limit, but reported NLPs will be used to monitor distribution of securities in the new 4-week bill auctions. This announcement does not affect or change the NLP calculation, reporting requirements, and application of the NLP for the auction of any security other than the 4-week bill.