What is Full Call Auction? Here's the Mechanism and Why It's Used

Not even a month after listing, IPO stocks CDIA and COIN have gained significant attention from investors due to their rapid price surge. Both stocks have repeatedly hit the Upper Auto-Rejection Limit and have even been suspended, placed on the Watchlist Board, and traded using a Full Call Auction mechanism.

Unlike the Continuous Auction, where the bidding process is conducted continuously based on price and time priority, how does the Call Auction mechanism work?

What is a Call Auction?

A Call Auction is a trading mechanism where bid and offer quotes are matched only at a predetermined time. This means that buy and sell orders are accumulated during the trading session and executed at the same price when the session ends. The last price is then determined based on the trading volume with the most significant match.

This mechanism is typically applied daily during the Pre-Opening and Pre-Closing sessions only. However, for stocks on the Watchlist Board, the Call Auction is fully applied, including during Sessions I and II, hence the term Full Call Auction.

Using IEP and IEV as Price References

Indicative Equilibrium Price (IEP) represents the potential price formed based on the most significant transaction volume that can be matched, while Indicative Equilibrium Volume (IEV) represents the potential accumulated transaction volume that will be matched at the formed price, i.e., IEP. Investors or traders can refer to this information to place their orders.

Purpose of Full Call Auction

• Reduce sensitivity to aggressive orders

• Reduce price volatility

• Improve the price discovery mechanism to avoid abnormal price formation

Key Differences between Continuous Auction and Call Auction

	Continuous Auction	Call Auction
Price Formation Transparency	Bid & Offer	IEP & IEV
Matched Immediately	Yes	No
Volatility	Higher	Lower
Sensitivity to Aggressive Orders	High	Low

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Disclaimer: The content is made for educational purposes, not a recommendation to buy or sell a particular stock. PT KAF Sekuritas Indonesia is licensed and supervised by the Financial Services Authority (OJK).