What is a periodic call auction, and why are some stocks traded in this category?
A Periodic Call Auction is a special trading method used for stocks that have low trading activity. Instead of continuous trading, these stocks are traded in scheduled auction sessions during the day.
- Trading takes place in 6 sessions.
- Only Market and Limit orders are allowed.
- GTT, Stop-Loss and IOC orders are not allowed.
- If your order is not executed in one session, it is carried forward to the next session.
- This system helps provide better price discovery and reduce price volatility in less-traded stocks.