Stock Auction.

December 23, 2020 By Swapnil Suryawanshi

An auction is usually a process of buying and selling goods or services by offering them up for bid, taking bids, and then selling the item to the highest bidder or buying the item from the lowest bidder. Some exceptions to this definition exist and are described in the section about different types. The branch of economic theory dealing with auction types and participants’ behavior in auctions is called auction theory.

An auctioneer and assistants scan the crowd for bidders.

What is stock auctione :

An auction is a mechanism where exchange auctions the investor’s stock holding when the person had sold the stock but is unable to deliver it within a stipulated time period. … It takes place mostly due to an investor’s carelessness. Whenever you sell shares, there’s always a buyer on the other sid.

A late 19th Century auction at the Hotel Drouot, Paris (painting by Albert Bettannier).

Why does auction trading happen in stock market :

The buyer of the shares is the rightful acquirer of the shares and the shares needs to be transferred to his account. Since the seller has defaulted in delivery of the shares, the exchange would put the undelivered shares for “Auction”. This Auction will happen on the T+2 day itself.

Duo Yun Xuan auction house in MalaccaMalaysia

What happens when shares go into auction :

In an auction market, buyers enter competitive bids and sellers submit competitive offers at the same time. The price at which a stock trades represents the highest price that a buyer is willing to pay and the lowest price that a seller is willing to accept.