Business Daily from THE HINDU group of publications
Monday, Jun 22, 2009
ePaper | Mobile/PDA Version | Audio | Blogs
Business Daily from THE HINDU group of publications Monday, Jun 22, 2009 ePaper | Mobile/PDA Version | Audio | Blogs |
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Money & Banking
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Govt Bonds Uniform pricing for G-sec auctions C. Shivkumar Bangalore, June 21 Till March this year, the Reserve Bank of India’s preferred method of government security auctions was the multiple price method. However, since the beginning of this financial year, it has shifted to uniform pricing method and discontinued mentioning the weighted average prices of the securities. Under the multiple price method, successful bidders are expected to pay the actual price at which the bids were made. This implied that the weighted yields could be far lower than actual cut-off yields at the auction. In the uniform price method, all the successful bidders are expected to pay the price equivalent to the cut-off yields, irrespective of the bids made. Incidentally, even the Federal Reserve Bank of New York follows the uniform price method at the treasury auctions, where successful bid allotments are made at the stop out rate (in India this is the cut-off rate). More Stories on : Govt Bonds
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