Question: I placed a bid at the last CBN auction for 16% for 182 days and the stop rate was 17%. My bid was successful. Will the treasury bills be allocated to me at my bid rate of 16% or the stop rate of 17%?
At what rate are treasury bills allocated, stop rate or actual bid rate?
Answer: Treasury bills will be allocated to you at your actual bid rate.
The stop rate or marginal rate is simply the rate at which the amount offered for subscription is fully allocated. That means bidders that bidded at the stop rate may not get a full allocation.
If N50Billion is offered for example, allocation will be discontinued the moment N50Billion is allocated (irrespective of the fact that those that bidded at the stop rate did not get a full allocation). To make the system fair, every bidder that bidded at the stop rate will get an allocation on a pro rata basis (a percentage of what you asked for based on the total volume of bids at that rate.
You don’t need to feel bad that you did not bid at the stop rate. To get a full allocation, your rate needs to be lower than the stop rate.
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