auction is A public sale of a security, typically a bond, where the issuer invites authorised dealers to bid in yield or price terms for the security.it is a method a method of structuring an issue, which involves auctioning an issue to the investor. An issue can be marketed with a floor premium and a maximum premium, say, Rs 10 and Rs 60. The person or the investor who offers best best premium gets the allotment first, and the allotment is continued by accepting the next best deal till the issue is completely subscribed. If there is an oversubscription at any level and below, the usual method of proportionate allotment is followed.
the market in which buyers and sellers involves in bidding for shares and bonds is called auction market . The stock market is also known a s an auction market, in as much as buying and selling are done through open bid and offer, as differentiated from over-the-counter market, where the prices are negotiated.
The auction markets is in huge demand only because of a fact that the process allows for quick and swift trading. Competitive bids for available stocks and bonds can be accepted and approved immediately, in order to participate in the bid one has to meet strict criterias of the bidding process.