An Auction is a price discovery mechanism where orders accumulate and execute at a single equilibrium price, used by exchanges at market open and close.
LSE Auction Schedule
| Auction Type | Timing | Purpose |
|---|---|---|
| Opening Auction | 07:50-08:00 | Determine fair opening price |
| Closing Auction | 16:30-16:35 | Establish official closing price |
| Intraday Auctions | Various | Price discovery for less liquid stocks (SETSqx) |
How Auctions Work
- Call Period: Orders accumulate for ~10 minutes without execution
- Indicative Price: Continuously updated showing likely uncrossing price
- Random Close: Auction ends within 30-second window (prevents manipulation)
- Uncrossing: All matched orders execute at single equilibrium price
The random close timing is deliberate - traders cannot predict the exact uncrossing moment, making price manipulation difficult.
Auction Order Types
| Order Type | Execution Behaviour |
|---|---|
| Limit Order | Execute at specified price or better |
| At-Auction Limit | Only execute in auction, cancelled if not filled |
| Market Order | Execute at whatever uncrossing price is determined |
Why Auctions Matter
The closing auction price serves as the official daily close for FTSE index calculations and is the reference point for derivatives settlement and corporate actions like dividends and rights issues.