provisions in the 1933 act exempt commercial paper from these registration requirements so long as the maturity does not exceed 270 days. To avoid the costs associated with registering issues with the SEC, issuers rarely issue commercial paper with a maturity exceeding 270 days. In Europe, commercial paper maturities range between 2-365 days. To pay off holders of maturing paper, issuers generally "rollover" outstand- ing issues; that is, they issue new paper to pay off maturing paper. Another consideration in determining the maturity is whether the paper would be eligible collateral by a bank if it wanted to borrow from the Federal Reserve Banks discount window. In order to be eligible, the papers maturity may not exceed 90 days. Because eligible paper trades at a lower cost than paper that is ineligible, issuers prefer to sell paper whose maturity does not exceed 90 days. The combination of its short maturity and low credit risk make com- mercial paper an ideal investment vehicle for short-term funds. Most investors in commercial paper are institutional investors. Money market mutual funds are the largest single investor of commercial paper. Pension funds, commercial bank trust departments, state and local governments, and nonfinancial corporations seeking short-term investments comprise most of the balance. The market for commercial paper is a wholesale market and transac- tions are typically sizeable. The minimum round-lot transaction is $100,000. Some issuers will sell commercial paper in denominations of $25,000. Commercial paper is the largest segment of money market exceeding even U.S. Treasury bills with just over $1.5 billion in commercial paper outstanding at the end of April 2001. Exhibit 5.1 presents a monthly time series of the amount of commercial paper outstanding for the period Jan- uary 1991 through April 2001. The source of these data is the Federal Reserve. The Federal Reserve Bank of New York collects the data on the     amount of commercial paper outstanding from 16 commercial paper dealers and 43 firms that sell commercial paper directly to investors on forms FR 2957a and b. The Federal Reserve Bank of New York also col- lects, seasonally adjusts, and releases month-end data on outstanding commercial paper from the same respondents.   Direct Paper versus Dealer Paper Commercial paper is classified as either direct paper or dealer paper. Direct paper is sold by an issuing firm directly to investors without using a securities dealer as an intermediary. The vast majority of the issuers of direct paper are financial firms. Because financial firms require a continu- ous source of funds in order to provide loans to customers, they find it