Definition
Periodic Call Auction
A periodic call auction is a trading mechanism for illiquid securities in which orders are batched and matched at a single price in short, repeated auction sessions through the day instead of continuous trading.
Indian exchanges apply periodic call auctions to illiquid scrips and to stocks under ESM or GSM to reduce manipulation. Trading happens in multiple short windows; orders accumulate in each window and execute at one equilibrium price, concentrating thin liquidity and dampening price gaming.
By batching trades rather than matching them continuously, the periodic call auction makes it harder for a single participant to push the price with small orders. The criteria for classifying a stock as illiquid, and the auction schedule, are defined by the exchanges and reviewed periodically.
Related terms
- Pre-Open SessionThe pre-open session is a short window before regular trading begins, during which orders are collected and a single opening price is established through a call auction to absorb overnight information.
- Auction MarketAn auction market is a trading mechanism in which buy and sell orders are accumulated and matched at a single clearing price that maximises executable volume, rather than continuously matching as orders arrive.
- Enhanced Surveillance Measure (ESM)The Enhanced Surveillance Measure is a SEBI/exchange framework that places small-cap and micro-cap securities showing unusual price-volume behaviour under additional surveillance to curb excessive speculation.
- Graded Surveillance Measure (GSM)The Graded Surveillance Measure is a SEBI/exchange framework that imposes escalating restrictions on securities with weak fundamentals or abnormal price behaviour, moving them through stages of increasing severity.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.