# Presentation: 411746

## Treasury Tax & Loan Investment Program

**Treasury Tax & Loan Investment Program**

**Term Investment Option (TIO)**** ****Program**
**Overview**
**Updated March 2008**

## TT&L Investment Program Introduction

**TT&L Organizational Stakeholders**
- Department of the Treasury / Fiscal Service
- Office of the Fiscal Assistant Secretary (OFAS)
- Financial Management Service (FMS)
- Bureau of the Public Debt (BPD)
- Federal Reserve System
- Federal Reserve Bank of St. Louis
- Federal Reserve Bank of New York
- TT&L Depositary Institutions

## TT&L Investment Program Overview

**Treasury has funds based on:**
- Cyclical factors (strong vs. weak economy)
- Seasonal factors (peak tax periods)
- Monthly cash flow (middle through end of month)
- Legislative Factors (debt ceiling)
**Investment Options**
- Direct Investment
- Dynamic Investment
- Special Direct Investment
- Term Investment Option (TIO)
- Reverse Repurchase Agreement (REPO)

## Term Investment Option (TIO)Overview

**Treasury Objectives**
- Provide tax payers with a greater rate of return on funds invested
- Increase investment capacity in the TT&L program
**Participant Benefits**
- Greater certainty of funding
- Enhanced flexibility
**Pilot Program - April 2002**
**Permanent Program Inception - October 2003**

## Term Investment Option (TIO)Overview

**TIO Participants**
- Participants must be TT&L depositaries in sound financial condition
- Money center banks, regional banks, & credit unions
- Currently 63 participants (March 2008)

## Term Investment Option (TIO)Overview

**General Overview**
- Excess funds offered for a _fixed term_
- Funds awarded through a competitive bidding auction process
- Web-based application (TERMLink®) used for submitting bids

## Term Investment Option (TIO)Process

**Update Notification**
- General intent notice sent to participants (via e-mail) one day prior to official announcement** **
**Announcement Day**
- Offering amount, length of term, acceptable collateral
**Auction Day**
- Participants place bids by cutoff time (usually 11:00am ET)
- Results announced within 5 to 15 minutes

## Term Investment Option (TIO) Process

**Investment Day**
- Collateral pledged by designated time (12:00pm ET)
- Funds are settled into awarded participant’s TIO and Reserve account (by 2:00pm ET)
**Maturity Day**
- Principal and interest are collected from participants
- Collateral is available after funds are collected

## Term Investment Option (TIO)Single-Rate Auction

## Term Investment Option (TIO) System

** ****TERMLink – Web Interface**
- View auction announcements
- Place bids
- View recent bid history
- View general auction results
- View individual awards

## Term Investment Option (TIO)Results Summary 

**TIO Permanent Program Results As March 2008**
- Invested $2.5 trillion in 472 auctions
- Average offering size: $6 billion
- Largest - $34 billion
- Smallest - $1 billion
- Average term to maturity: 7 days
- Longest - 32 days
- Shortest - 1 day

## Term Investment Option (TIO)Results Summary

**Fiscal Year 2007**
- Invested $603 billion in 111 auctions
- 68% of TT&L funds were invested through TIO
- Average bid-to-cover ratio of 2.80

## Term Investment Option Sources of Information

**Historical Results**
- For announcement information, auction results and an historical summary of TIO activity, visit the Treasury’s FMS Website.
- E-mail notification sign-up available.
- http://fms.treas.gov/tip/reports.html