What Is Call Auction? How Does It Work?

A call auction is a stock trading mechanism that allows investors to submit buy/sell orders during a specific time window. The exchange’s system then processes these orders collectively to determine a single unified transaction price.

This price is typically referred to as the opening price or closing price, depending on whether it occurs before the market opens or closes.

• A-share Opening Call Auction: 9:15 AM – 9:25 AM (trading days)

• A-share Closing Call Auction: 2:57 PM – 3:00 PM (trading days)

How It Works

Imagine a bustling vegetable market where vendors haven’t set prices yet. Buyers and sellers shout offers to negotiate deals.

• The opening call auction acts like a "pre-market pricing session":
  Between 9:15–9:25 AM, buyers/sellers compete—higher bids or lower offers get priority when the market opens.

• The closing call auction follows the same logic:
  More competitive prices submitted between 2:57–3:00 PM are prioritized for execution.

Key Functions

1. Price Discovery
   Aggregates supply and demand to determine a fair price reflecting market equilibrium.
   (Like vendors adjusting prices based on customer demand and inventory.)

2. Reduces Volatility
   The opening/closing price is derived from bulk orders, minimizing erratic price swings caused by individual trades.
   (Similar to a market referee setting a reference price to prevent chaos.)

3. Prevents Manipulation
   Centralized order processing reduces the risk of opening/closing price manipulation by large players.
   (e.g., preventing a "vendor" from artificially inflating or crashing prices.)

4. Enhances Efficiency
   A unified price ensures fairness and streamlines transactions.

Notes

• Orders submitted during the call auction cannot be canceled.

• The opening auction sets the day’s opening price; the closing auction determines the closing price.

In Summary:
A call auction is a mechanism to consolidate orders and set opening/closing prices. Its core roles are ensuring market fairness, facilitating price discovery, curbing volatility, and mitigating manipulation risks.