- Dutch auction
- Auction in which the lowest price necessary to sell the entire offering becomes the price at which all securities offered are sold. This technique has been used in Treasury auctions. The New York Times Financial Glossary————auction in which the lowest price necessary to sell the entire offering becomes the price at which all securities offered are sold. This technique has been used in Treasury auctions. Often used in risk arbitrage. auction system in which the price of an item ( stock) is gradually lowered until it meets a responsive bid ( government T-bills) or offer ( corporate repurchase) and is sold. In a corporate repurchase, a range of prices is set by the company within which shareholders are invited to tender their shares. The tender offer is open for a specific period of time ( i.e., 20 days), and the quantity of stock to be purchased is stated as well, subject to proration if more shares are tendered than can be legally purchased under the stated terms (often an additional amount equal to 20% of outstanding shares can be purchased). The price paid is that at which the amount stated to be purchased can be sold. Compare to double auction system. Bloomberg Financial Dictionary————An action by a party wishing to acquire a security. Holders of the security are invited to make an offer to sell, within a specific price range. The acquiring party will buy from the holder with lowest offer. Euroclear Clearing and Settlement glossary
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An auction where the price is lowered gradually - from a price well above the true value - until a responsive bid is seen. This then becomes the price at which the offering is sold. The US Treasury sells its Treasury bills using a similar basis where the bids are termed tenders.► See also Treasury Bill.* * *
Dutch auction UK US noun [C]► COMMERCE an auction (= public sale) at which the price being asked for something is slowly reduced until someone will buy it: »Some traders, especially those selling fruit, would stand on their stalls and sell their goods by Dutch auction.
► FINANCE a situation in which two or more groups compete to see who can reduce an amount the most: »The tendering process must not be a ""Dutch auction"": unfairly trading one tenderer off against another by using the lowest tender to seek a reduction in time or costs from the others.
»The Government and opposition are engaged in a Dutch auction over who would cut the most civil service jobs.
► FINANCE in the US, a system used by a company that wants to buy back its shares. The company sets the minimum and maximum prices it is willing to buy at, the shareholders state which price they would be willing to sell at, and the company then chooses which shareholders to buy from: »Hambrecht conducts so-called Dutch auctions, in which the price is set at the highest possible level that allows all shares to be sold.
► COMMERCE a UNIFORM PRICE AUCTION(Cf. ↑uniform price auction)
Financial and business terms. 2012.
