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.
Key takeaways
A call auction is an event where participants buy or sell units of a good by submitting price orders that are collected and matched to create contracts.
Most major stock markets use call auctions to open and close daily trading, with continuous order-matching markets operating during the rest of the day.
In call auction markets, orders are collected throughout the day and an auction occurs at a specified time so buyers and sellers arrive at a single price.
Buyers state a maximum price at which they are willing to buy, while 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 compared to other trading mechanisms.
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.