Call Auction is a trading mechanism in financial markets where buy and sell orders for a security are accumulated over a fixed period and executed simultaneously at a single price, known as the equilibrium or call price. This method is used to determine a fair price for securities, especially during market openings, closings, or illiquid trading periods. Understanding call auctions helps investors, traders, and market participants make informed decisions and ensures transparency in price discovery.

In a call auction, participants submit orders specifying the quantity and price they are willing to buy or sell. At the end of the auction period, the exchange matches buy and sell orders at a single price that maximizes the total traded volume. This process reduces price volatility and provides an accurate reflection of market demand and supply at a given time.

Call auctions are commonly used for the opening and closing sessions of stock exchanges, including NSE and BSE in India. They are particularly useful for thinly traded securities or during special corporate actions, such as IPO listings, rights issues, or block deals. By concentrating orders and executing them at a single price, call auctions improve liquidity and reduce price manipulation risks.

The equilibrium price determined through a call auction serves as a reference for continuous trading sessions, providing guidance to investors on the fair market value. SEBI regulations govern the operation of call auctions in India, ensuring transparency, fair participation, and timely disclosure of executed prices.

In summary, a call auction is a structured trading method that accumulates buy and sell orders and executes them at a single price to achieve fair price discovery. Understanding its mechanics, benefits, and regulatory framework allows investors and traders to participate effectively, ensuring transparent and efficient trading in SEBI-regulated markets.