Level 3: Matching Markets

When it fits

Multiple participants want to buy or sell a defined product or obligation, with compatible specifications and delivery requirements.

How it works

• The auction proceeds through a series of rounds.
• In each round, bidders state the quantity they are willing to buy or sell at the announced price.
• As the price changes, bidders adjust their quantities.
• Where permitted, a bidder can switch from buying to selling, or from selling to buying.
• The auction matches buying and selling quantities under the published rules.

What to define before bidding

• Product specification, location and delivery obligations.
• Quantity units, lot sizes and increments.
• Buyer and seller eligibility, including permission to switch sides.
• Starting price, round rules and bidder feedback.
• Allocation, payment and settlement rules.

Advantages

• Discovers a common market price using both buying and selling interest.
• Matches quantities across multiple buyers and sellers in one auction.
• Lets participants respond as buyers or sellers as prices change, where permitted.