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1.
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Why is it called "OpenBook?"
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OpenBook is an interactive online auction created for institutional
investors. During the online auction the "book," or set of bids in the
auction, is visible to the bidders and the company offering the bonds.
This open process allows institutional bidders to have an understanding
of where they stand in the bid stack and issuers to have a clearer
understanding of the demand curve for their offering. In the traditional
process, the book is closed both to the buyers and the issuer.
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2.
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What does it cost to participate in an OpenBook auction?
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There are no commissions or fees charged to investors for participation
in an OpenBook Auction.
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3.
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Do I get bonds at the same price as the institutions directly participating
in the auction?
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Yes, the OpenBook auction is a uniform-price Dutch auction. All
successful bidders, individual or institutional, receive bonds at the
same price and yield.
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4.
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How can I learn about upcoming OpenBook auctions?
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Check the Current Auctions section of the web site, or sign up for email
alerts.
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5.
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What terms are set before an auction begins?
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The issuer sets the following, which are announced before an auction:
- Deal size
- Benchmark Treasury bond
- Minimum and maximum acceptable bid spread over the benchmark Treasury bond rate
- Maximum for the benchmark Treasury bond rate
- Maximum bid size per investor
- Protected spread range
- Maturity
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6.
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What is the benchmark Treasury?
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The benchmark Treasury is a reference U.S. Treasury security of comparable maturity to the bonds being auctioned. The benchmark Treasury rate will be used to price the bond after the auction.
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7.
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What is the "spread over the benchmark Treasury rate?"
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The spread over the benchmark Treasury rate is the differential in basis
points between the Treasury rate and the rate on a particular bond.
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8.
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Can individual investors participate directly in the auction?
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No. At this time the online interactive portion of the auction is
restricted to institutional investors. Individual investors may only
participate through non-competitive bidding.
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