Office of Debt Management

Treasury’s Current Views on the Operational Design

of a Regular Buyback Program

August 2023
Executive Summary

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This presentation provides Treasury’s current views on the operational design 

parameters of a regular buyback program for liquidity support and cash 

management.

 At the May 2023 Quarterly Refunding, Treasury announced plans to implement a regular buyback 

program in 2024 and released a presentation on its high-level current views on the use cases and 

design.

 The following slides go into more detail on Treasury’s current views on important operational 

design parameters, specifically:

 Buckets 

 Purchase Amounts

 Security Exclusions

 Purchase Limits per CUSIP

 Announcements

 Results

 Once the program is implemented, Treasury will regularly evaluate these parameters to determine 

if adjustments are needed in order to achieve its liquidity support and cash management objectives.
Buckets

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Treasury plans to conduct buyback operations in 9 buckets across-the-curve for 

nominal coupon and TIPS securities. 

 For liquidity support: Treasury plans to conduct operations in each bucket 1 to 2 times per quarter (~ 

1 operation per week) but is still determining the exact number of operations per bucket.

 For cash management: Treasury anticipates conducting operations regularly, though the size and 

frequency will depend on a variety of factors, including the seasonality of fiscal flows.

 Possible that multiple operations could occur in a week

 Cash management buyback operations will likely occur predominantly during the weeks immediately 

surrounding major tax payment dates (e.g., April 15, June 15, September 15, and December 15)

Bucket # Product Objective Maturity Sector (Years)

1 Nominal Coupons Cash Management & Liquidity Support 0 to 2

2 Nominal Coupons Liquidity Support 2 to 3

3 Nominal Coupons Liquidity Support 3 to 5

4 Nominal Coupons Liquidity Support 5 to 7

5 Nominal Coupons Liquidity Support 7 to 10

6 Nominal Coupons Liquidity Support 10 to 20

7 Nominal Coupons Liquidity Support 20 to 30

8 TIPS Liquidity Support 0 to 7.5

9 TIPS Liquidity Support 7.5 to 30
Purchase Amounts

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At each quarterly refunding, Treasury plans to announce the maximum amount it is 

willing to buy back during the upcoming quarter for liquidity support and cash 

management. 

 For liquidity support:

 Initially, Treasury plans to set a maximum amount of $30 billion per quarter across buckets.

 A maximum amount of $4 billion per bucket for nominal coupons per quarter. 

 A maximum amount of $1 billion per bucket for TIPS per quarter.

 Treasury anticipates that over time modest adjustments to the maximum amounts could be 

considered and any adjustments would be announced at quarterly refundings. 

 For cash management:

 The maximum amount per quarter may vary, but Treasury anticipates cash management 

buybacks in the first year of implementation will be no more than $120 billion.

 Treasury plans to conduct most cash management buybacks in the 0 to 2-year nominal coupon bucket but 

may also consider cash management buybacks in short maturity TIPS.

 Treasury does not plan to establish a fixed minimum amount to buy back in operations for liquidity 

support or for cash management.

 Actual buyback amounts will depend on market conditions and quality of offers in an operation. 

It is possible that Treasury may not buy back any securities during an operation.
Security Exclusions

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Treasury plans to exclude securities from buyback operations that will not help it 

achieve its liquidity support and cash management objectives.

 In general, securities that have the characteristics below will likely be excluded:

 Cheapest-to-deliver against futures contracts

 Trading with extreme repo specialness

 Trading extremely rich based on relative value measures

 On-the-run and near off-the-runs

 Specifically, for cash management:

 Securities with maturity dates that would not benefit Treasury from a cash management 

perspective would also be excluded.

 For example, if Treasury bought back securities with maturities that occur on dates with 

high cash inflows (such as major tax payment dates) this would potentially amplify rather 

than mitigate cash balance and issuance volatility.
Purchase Limits per CUSIP

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Treasury understands that if buybacks excessively reduce the amount of privately-held 

supply in a specific CUSIP this could harm rather than support secondary market 

liquidity.

 Treasury plans to set purchase limits per CUSIP based on maintaining a sufficient 

privately-held amount outstanding.

 Treasury will consider factors that may affect the actual privately-held float reasonably 

available for trading, such as STRIPS outstanding per CUSIP.

 Treasury will consider SOMA holdings.

 Limits may vary depending on product and maturity sector.
Announcements

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Treasury anticipates announcing buyback operations in the following manner: 

 Tentative Schedule 

 At each quarterly refunding, Treasury will release a tentative schedule for liquidity support 

and cash management buyback operations for the upcoming quarter.

 The schedule will include dates, purpose, bucket, and maximum purchase amount.

 Announcement Date

 Treasury will generally confirm the details from the tentative schedule one business day in 

advance of the buyback operation.

 Treasury will also provide a list of potential eligible CUSIPs for the buyback operation.

 Operation Date

 The eligible CUSIP list for the buyback operation will be confirmed at or prior to the 

operation opening.

 Participants in the buyback operation will be notified via FedTrade when the operation begins 

and ends.
Results

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Treasury plans to publicly release information regarding buyback results shortly after 

the end of each buyback operation.

 Treasury aims to provide transparency regarding operations while also avoiding any risks 

that might arise from providing market sensitive information too quickly. 

 Given these aims, Treasury plans to release the following results shortly after each 

operation ends:

 Total Offers Accepted

 Total Offers Submitted

 Offers Accepted per CUSIP

 Weighted Average Price of Offers Accepted per CUSIP

 Treasury plans to regularly evaluate the appropriate degree and timing of information 

provided in connection with conclusion of a buyback.
Outstanding Issues for Further Consideration

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 Pricing methodology for evaluating offers

 Number of operations per quarter in each bucket

 Approach to scheduling buyback operations (expected day and timeslots, 

adjustments around holidays/market events, etc.)