WASHINGTON -- Broker-dealers may not place bids through their computers to obtain government bills, notes, and bonds, the Treasury Department's Bureau of the Public Debt announced yesterday in a release.
The establishment of the new electronic system, as reported in The Bond Buyer last week, will allow firms outside the banking system to submit competitive and non-competitive tenders for their own account and for customers.
A second automated system designed to handle a large volume of last-minute orders from the primary dealers and big financial institutions that dominate the competitive bidding is scheduled to be available by the end of the year.
Currently, only depository institutions with FedLine terminals have an electronic link to participate in government auctions. With the latest changes, dealers and brokers will be able to get the same software used by the banks.
Qualifying firms must have an autocharge agreement with a local bank guaranteeing payment for any securities purchased, the Treasury said. A spokesman said firms seeking further details should contact their local Federal Reserve Bank.