What is the Auction Process?

Before understanding what auction means, let’s understand what is pay-in & what is pay-out day?

Pay-in is the day when your broker collects the securities from your demat account and transfers them to the exchange and clearing member. This happens when you sell a security. On the other hand, pay-out is the day when the clearing member transfers the securities to the broker. The broker then transfers those securities to your demat account. This happens when you buy a security.

An auction process is a mechanism where an exchange auctions the investor’s stock holding when the person has sold the stock but is unable to deliver it within a stipulated time period. An auction can be a live, online, or sealed bid auction.