Central Bank of the Republic of China (Taiwan)

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What do "competitive bidding" and "noncompetitive bidding" mean?

1. A competitive bid is one where you specify the prices or yields at which you wish to purchase securities. In competitive bidding, bids will be accepted in order, starting with the price higher than the minimum acceptable price or the yield lower than the maximum acceptable yield set by the Ministry of Finance (MOF). The single-yield method was adopted for treasury bill auctions in Oct. 2001 and bond auctions in July 2004. In a single-yield auction, all successful bidders are required to pay settlement amounts for awarded securities at the price equivalent to the highest accepted yield.

2. For noncompetitive bidding, you just specify the quantities you wish to buy, while the price or yield is determined by the accepted competitive bids at the auction. In a single-yield auction, all bids are competitive, except 2% of the total issue is allowed for small investors' subscription through the Chunghwa Post and TWSE, subject to a maximum subscription of NT$1 million each. The price for subscribed bonds is calculated at the highest accepted yield at the auction. The remaining balance after subscription is open for competitive bids.