Mumbai: The Reserve Bank of India on Friday said the benchmark government securities (g-sec) of various tenor and floating rate
bonds (FRBs) will be issued using the uniform price auction method.
On a review of market conditions and market borrowing program of the government, it has been decided that benchmark securities of tenor 2-year, 3-year, 5-year, 10-year, 14-year tenor and Floating Rate Bonds (FRBs) will be, henceforth, issued using uniform price auction method, the RBI said in a release on Friday.
For other benchmark securities, i.e. 30-year and 40-year, the auction will continue to be a multiple price based auction.
In a uniform price auction for issuing government securities, all the successful bidders are required to pay for the allotted quantity
of securities at the same rate, i.e., at the auction cut-off rate, irrespective of the rate quoted by them.
On the other hand, in a multiple price auction, the successful bidders are required to pay for the allotted quantity of securities at the respective price/yield at which they have bid.