After allowing for the total amount of noncompetitive bids, the officials start awarding the remaining amount to competitive bidders, starting with the highest price and working down to the stop-out price, at which point the Treasury's order is filled. No one bidding below the stop-out price receives bills at the auction. Unless reinvestment is requested, the Treasury automatically remits a check to the holder at maturity. The Treasury sets the coupon rate and the minimum price it is willing to accept on notes and bonds and announces the amount of securities for sale. All successful competitive bidders pay their bid price.
Noncompetitive bidders pay the average price established by the competitive bidders.
This is the method used most frequently to float notes and bonds. Neither the price nor the coupon rate on the new securities is set in advance by the Treasury. Instead, it merely announces the amount of securities available and calls for yield bids. All successful competitive bidders receive their bid yield. Noncompetitive bidders receive the average yield established by the competitive bidders.