noncompetitive bid

n.
A method of purchasing U.S. Treasury bills at the weekly public auction by agreeing to purchase a given amount of securities at the average price set at the auction.

Method of buying Treasury bills without having to meet the high minimum purchase requirements of the regular Dutch Auction also called noncompetitive tender. The process of bidding for Treasury bills is split into two parts: competitive and noncompetitive bids.

Competitive Bids are entered by large government securities dealers and brokers, who buy millions of dollars worth of bills. They offer the best price they can for the securities, and the highest bids are accepted by the Treasury in what is called the Dutch auction.

Noncompetitive bids are submitted by smaller investors through a Federal Reserve Bank, the Bureau of Federal Debt, or certain commercial banks. These bids will be executed at the average of the prices paid in all the competitive bids accepted by the Treasury. The minimum noncompetitive bid for a Treasury bill is $10,000. See also Treasury Direct.