What is a call auction?
A call auction is an event where people buy or sell units of a good. Participants choose whether to buy or sell units at certain prices and the orders are collected and matched to make a contract.
Where have you heard about call auctions?
Most major stock markets open and close trading each day with a call auction. A continuous market – the procedure of continuously matching up orders – usually operates for the rest of the day.
What you need to know about call auctions.
In a call auction market, orders are collected during the day and an auction will take place at a specified time of the day so that buyers and sellers arrive at a single price. Rules at call auctions vary from auction to auction. Buyers will usually state a maximum price at which they are willing to buy and sellers state a minimum price at which they are willing to sell. A decrease in price instability is one of the biggest benefits of call auctions.