Business, Legal & Accounting Glossary
An auction market is a market wherein buyers and sellers both enter simultaneous bids. Unlike a typical auction, an auction market features many buyers and sellers who transact through brokers who bid competitively for the best price. A security’s price for a transaction in an auction market is determined when a buyer’s “bid” price meets a seller’s supply, or “ask” price. The New York Stock Exchange and Chicago Board of Trade, the US futures exchange, are examples of an auction market. However, the bond market, which is an over-the-counter market, is not an example of an auction market. In order to be considered an auction market, the market must be centrally located, and involve physical interaction between buyer and seller.
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This glossary post was last updated: 4th February, 2020 | 0 Views.