How is Commercial Paper or CP issued? Private companies or issuers typically set up a commercial paper program. This program gives them the flexibility to issue paper periodically up to a maximum outstanding amount at any given time. It allows issuers to adjust their financing swiftly to meet immediate funding needs. By establishing a commercial paper program, issuers can simplify the issuance process. The program predefines the terms under which all of the commercial paper can be issued, reducing the need for fresh negotiations for each new issuance. This approach also helps issuers build a consistent presence in the market, which can improve name recognition and potentially lower borrowing costs for future issuances. As money market instruments, commercial paper generally has a maximum maturity of 12 months. However, in the US commercial paper maturities are capped at 270 days. This is because US commercial paper with maturities of less than 270 days are exempt from the registration requirements typically enforced by the Securities and Exchange Commission, or SEC for securities offered to the public. This exemption carries several key benefits. Firstly, simplified issuance process, issuers can avoid the comprehensive and time consuming process of registering the securities with the SEC. Reduced costs, skipping the registration process also helps issuers save on the costs associated with preparing and filing registration documents such as legal and accounting fees. Faster access to capital, so without the need for lengthy SEC registration issuers can access capital markets more quickly, which is particularly advantageous for addressing immediate or unexpected financing needs. This makes commercial paper an attractive option for corporate treasurers. Managing short-term liquidity commercial paper is typically sold to institutional investors either through a dealer network or directly to buyers in the money market. And the SEC exemption reflects the assumption that these sophisticated investors require less regulatory protection compared to the general public. Please note though, while commercial paper can have a maturity of up to 270 days in practice, actual maturities are often much shorter, typically around 30 days in the US.