What is Periodic Call Auction?

What is Periodic Call Auction?

The Securities and Exchange Board of India (SEBI) introduced the concept of Periodic Call Auction (PCA) with the aim of mitigating volatility in illiquid stocks. As per the National Stock Exchange (NSE), trading in illiquid stocks in the equity market is limited to periodic call auction sessions.

The Secondary Market Advisory Committee (SMAC) recommended the extension of call auction sessions to include illiquid shares in the equity market, including the pre-open session for all shares.

According to SEBI, illiquid stocks are defined as follows:
  1. Shares with an average daily number of trades of less than 50
  2. Shares with a daily trading volume of less than 10,000, and similar conditions.
Typically, there are six call auction sessions conducted each day, starting from 9:30 AM and lasting for one hour each. The call auction window for trading is similar to the pre-market session conducted for equity stocks.

Furthermore, there is a 45-minute timeframe provided for order placement, modifications, and cancellations. It's important to note that all orders are accepted and matched within the next 8 minutes, and trades are confirmed. Additionally, there is a 7-minute buffer period before the subsequent call auction session begins.

If the goal is to purchase or sell stocks that are infrequently traded and are on periodic call auctions, orders need to be placed during the initial 45 minutes, and the customer can buy or sell depending if the order is matched over the following 8 minutes. To get more information, please take a look at BSE FAQ and NSE circular.

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