Timeline of the Marketable Securities Program
Advance refund and subscription offerings were the most common methods for issuing marketable securities. The 1960's brought book entry direct borrowing from foreign sources, retirement bonds, and the replacement of quarterly issues.
[January 1, 1968: Regulations governing book-entry for marketable securities were issued. The new regulations allowed securities in book-entry form for transferable Treasury bonds, notes, bills, and certificates of indebtedness. The book-entry system was expanded a year later to include savings bonds issued to trustees of certain employees' thrift and savings plans.]
By this time, all long-term securities were sold using the auction process. This decade also introduced state and local government securities and cash management bills. The maximum bid amounts for bills and notes were raised.
During this decade, U.S. retirement plan bonds were discontinued. Changes in the tax law eliminated new Treasury notes and bonds in bearer form and the auction process continued to evolve. The 1980’s also introduced STRIPS (Separate Trading of Registered Interest and Principal Securities).
Throughout the first half of the decade there was a movement towards automation, transparency and precision. Rules governing the sale and issuance of Treasury Securities, known as the Uniform Offering Circular, were published.
In 1993, the first automated auction system was launched. The automated calculation functionality eliminated the need for manual processing, ultimately resulting in an auction release time of two minutes. Uniform price auctions were introduced, and changes in minimum purchase amounts made bidding more accessible to individuals and smaller financial institutions.
The period between 1995 and 1999 was marked by further automation in the auction process. Auction announcements and results were made available on Public Debt’s website. Auction bids for marketable securities could now be made online and individuals could place bids for their Legacy Treasury Direct accounts via touch-tone phone. To improve standardization and potentially increase competition in the auctions, three-decimal bidding was adopted. Lastly, a new type of security, Treasury Inflation-Protected security (TIPS) was introduced.
Since 2000, the marketable securities program has adjusted to the varying needs of government financing. In the late 1990’s, the government had several years of budget surpluses and adjusted its financing accordingly. Changes were made in the auction calendar to reduce the number of securities being auctioned. In addition, the buyback program was introduced. Buybacks functioned like “reverse auctions” whereby Treasury purchased previously issued securities from the market to better manage Treasury's financing needs.
As the decade progressed and the government’s financing needs increased, securities were reintroduced and the number of auctions increased to record levels.
Further innovation made the auction process—from announcement to issuance—completely automated. Increases in the noncompetitive bidding limit and the introduction of $100 minimum purchase amounts and multiples allowed for broader participation.
Treasury continued efforts to improve transparency by releasing additional bidder statistics, detailing how much of the competitive portion of the auction was taken down by the primary dealers, direct bidders, and indirect bidders. In 2008, Treasury launched a completely web-based auction application, creating a more flexible, user-friendly experience.
More recently, Treasury introduced the Floating Rate Note (FRN) in 2013, the first new marketable security since the Treasury Inflation-Protected Security (TIPS) in 1997.