Treasury Securities Auction

Gao ID: AIMD-94-165R August 25, 1994

Pursuant to a congressional request, GAO provided information on the Department of the Treasury's securities auctions, focusing on: (1) Treasury's efforts to reduce the average time between the close of auctions and announcement of results; (2) whether Treasury would receive higher securities prices by reducing the processing time; and (3) auction participants' views on the effects that reduced auction processing time would have on their hedging strategies and the secondary Treasury securities market. GAO noted that: (1) Treasury has reduced the average auction processing time to 45 minutes through the use of its Automated Auction Processing System; (2) to ensure that auction results remain accurate, Treasury is cautiously proceeding with further reductions; (3) enforcing auction rules and detecting and correcting errors takes a large portion of the processing time; (4) there is no evidence that reduced processing time would increase Treasury's securities prices; and (5) auction participants believe that reducing auction processing time would have negligible effects on their hedging strategies and the secondary market.

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