What is the minimum denomination for most Commercial Paper?

The minimum denomination for most commercial paper is generally set at $100,000. This higher minimum is primarily designed to appeal to institutional investors, such as mutual funds and banks, rather than individual retail investors. Commercial paper is a short-term unsecured promissory note that businesses issue to finance their immediate needs, and due to the nature of this instrument, it demands a level of investment and knowledge that aligns more closely with institutional investors.

Setting a minimum denomination at $100,000 helps mitigate risks for issuers and ensures that only those with substantial capital and understanding of the market participate in these short-term securities. By adhering to this higher threshold, commercial paper markets facilitate liquidity and efficiency while being mindful of the sophistication required from investors participating in the marketplace.