What is uniform price method in bond auction?
Feb 23, 05:02

The RBI typically uses multiple price methods in government security auctions. But now it has re-introduced uniform price method after a long gap. The idea is to control volatility and further spike in yields. The RBI will use this method for the February 26 auction for sale of notified bonds worth Rs 11,000 crore. Under the uniform price method, all successful bidders are required to pay for the allotted government securities at the auction cutoff rate. Contrast that with the multiple price auction, where bidders pay at the respective rate they had bid. After the government announced a Rs 12 lakh crore borrowing programme, 10-year G-Sec yield had risen by 15-20 basis points.

Uniform price method