The half-hour session was dramatic. Twelve minutes after the bidding began, there were quotes in place for all the six-month Certificates of Deposit. That's when the 54 state financial institutions that took part started jockeying among themselves and forcing up interest rates in the heat of competition.
When it was all over, the average interest rate on state CDs had been pushed from 6.26 percent to 6.43 percent, producing a $106,579 gain in state revenue. The lowest accepted bid was 0.1 percent higher than what South Carolina would have gotten in a traditional placement.
State Treasurer Grady Patterson is touting BidSC as not only innovative and lucrative but also a time saver. The lightning half- hour of bidding didn't produce an ounce of paperwork--in fact, it reduced an eight- to 12-step process for banking staff and participating financial institutions to one: the online bid. It also gave all institutions, large or small, a shot at state funds, Patterson notes.
BidSC, which is similar to an Ohio auction of public funds, will be offered quarterly. Patterson is confidant that other states will follow suit and that BidSC is "a glimpse into the future of public finance."
