What is an Auction Market?

A market in which the buyers and sellers enter into competitive bids and offers respectively and simultaneously is known as the auction market. The final price at which the stock is traded reflects the lowest sum at which the seller is willing to sell and the highest amount the buyer is ready to pay.

The Auction Market is different from the Over the Counter market where the direct bargain is done between buyers and sellers on various trades individually. Also, unlike other traditional auctions, there is usually one seller and many buyers; an auction market has many buyers and sellers in search of simultaneous deals. E.g. New York Stock Exchange is a standard example of an auction market.

 

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