How do bidders know how much of each issue is being auctioned?
Ninety percent of each Treasury and Agency security owned by SOMA with a maturity of greater than thirteen days is available for lending each day. FedTrade refers to this amount available for borrowing as the “theoretical amount available” to dealers. If less than 90 percent of a security is in the SOMA custody account at the time of the auction due to outstanding loans and committed reverse repurchase transactions, then the remaining amount of the security in the SOMA portfolio will be available at the auction. FedTrade refers to this amount available for borrowing as the “actual amount available” to dealers. For example, if SOMA owns $1.0 billion of an issue, $900 million will be available to lend each day. However, if $500 million of the issue is out on loan and dealers failed to return the issue by noon, SOMA will hold only $500 million of the issue in custody at the time of auction. As such, the remaining $500 million of the issue will be available at auction. SOMA holdings are pr
