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Screen Shot 2019-03-10 at 3.23.05 PM.png - In the United...

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Unformatted text preview: In the United States, commercial paper ranges in maturity from 1 day to 270 days. The reason that The maturity of commercial paper does not exceed 270 days is as follows. The Securities Act of 1933 requires that securities be registered With the SEC. Special provisions in the 1933 act exempt Commercial paper from registration as long as the maturity does not exceed 270 days. Avoid The costs associated withRegistering issues WithThe SEC,Firm Rarely issue commercial Paper with maturities exceeding 270 days. Another consideration in determining the maturity is Whether the commercial paper would be eligible collateral for a bank that wanted to borrow from The Federal Reserve Bank‘s discount window. To be eligible, the maturity of the paper may not Exceeded 90 days. Because eligible paper trades at lower cost than paper that is not eligible, issuers Prefer to issue paper whose maturity does not exceed 90 days. ...
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