What is an opening or closing auction
An opening or closing auction is a procedure where an exchange collects buy and sell orders for a set period without matching them. It then fills as many as possible at one single price, which becomes the official open or close.
People use "stock market auction" and "call auction" for the same thing. An auction at the start of the day is the opening auction, often called the pre-open session. The one at the end of the day is the closing auction.
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Formal definition
In a call auction, orders build up in the order book during a call phase. While they build up, the exchange usually shows an indicative price and the size of the order imbalance. At the uncross, the matching engine picks the price that:
- executes the largest possible volume;
- if several prices tie, leaves the smallest unfilled imbalance;
- if they still tie, sits closest to a reference price, usually the last traded or previous close.
Every matched order trades at that one price, even if the buyer's limit was higher or the seller's limit was lower. Each exchange publishes its own exact tie-break rules in its rulebook.
Worked example (hypothetical)
Take a share with three possible prices, where Price A is the lowest and Price C the highest.
| Price | Buyers willing at this price or higher | Sellers willing at this price or lower | Volume that can trade |
|---|---|---|---|
| Price A | Many | Few | Small, limited by sellers |
| Price B | Moderate | Moderate | Largest |
| Price C | Few | Many | Small, limited by buyers |
Price B matches the most shares, so the auction prints at Price B. A buyer whose limit was Price C pays Price B. Orders left over stay unfilled or pass to the next session, depending on the order type.
Edge cases experienced traders meet
- No cross: if the best bid sits below the best ask, there is no auction trade. The exchange uses its reference price as the open or close.
- Extensions: if the indicative price moves too far from a reference, some exchanges extend the call period. This links to circuit breakers.
- Random end: some venues end the call phase at a random moment within a short window to limit last-second manipulation.
- Partial fills: at the uncross price, orders at the margin may be partly filled. Fill or kill and IOC orders may be rejected in an auction.
- Gaps: the auction price can differ sharply from the previous close. Leveraged positions on index or share CFDs can then lose money fast, and a stop order may fill well past its level.
Where you see the term
- PSX opening session: the Pakistan Stock Exchange runs a pre-open phase before continuous trading. Check the current session times and rules on the PSX official website. In Pakistan, trading in listed securities is regulated by the Securities and Exchange Commission of Pakistan (SECP), with trading in listed securities and commodities only via SECP-licensed securities and futures brokers.
- Platforms: order entry screens may offer "at the open" or "at the close" order types and show an indicative price during the call.
- Reports and news: official closing prices, index closes, fund valuations and index rebalancing trades all rely on the closing auction. That is why news often reports heavy closing-auction volume on rebalancing days.
Related terms
Frequent questions
What is an opening auction in simple words?
It is a short period before trading starts when the exchange collects orders and then sets one opening price that matches the most shares.
What does closing auction mean?
It is the same procedure at the end of the day. Its result is the official closing price.
Do I get my limit price in an auction?
No. All matched orders trade at the single auction price, which is equal to or better than your limit.
Do forex markets have auctions?
Spot forex trades over the counter without a central opening or closing auction. Exchange-listed shares and futures usually have them.