Direct bidder is a bidder that bids in an auction of the treasury securities and buys securities for the house account instead of buying them for any other party. There are a number of different examples of direct bidders such as primary dealers, non-primary dealers, secondary dealers, pension fund, mutual fund, hedge fund, financial institutions such as banks, government institutions, insurers and individual. The treasury department of the US Government allows direct bidding on the securities in both competitive and non-competitive modes as this is done in the form of auction first. There are two types of methods of direct bidding the competitive bidding and the non- competitive bidding. In competitive bidding the direct bidder specifies the return that he is expecting from the bid and the sale of the securities. In competitive bidding the securities that are sold in the auction are won by the purchasers on the basis of highest discount rate offered on the securities in the process of bidding. On the other hand in non-competitive bidding mode the bidder does not announces the specific rate of return during or before bidding. All the non-competitive bids are accepted and then these bids are competed yet again on the basis of increasing percentage of yield. At the end of the each auction the US department of the treasury securities announces the dollar amount of the securities that are purchased by the dealers and other direct bidders during the process of direct bidding. The information describes the amount of securities purchased by each group of direct bidders.
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