# London Stock Exchange Auctions - Impact of market orders?



## kkhliew (14 July 2020)

Hi all. Does anyone know how market orders are treated in LSE open/close auctions? Specifically: During the pre-auction call period, limit orders are incorporated into the order book following the 4 auction principles of maximum volume, minimum surplus, market pressure and reference price. The indicative price, volume and imbalance are worked out from these principles. What about market orders, which are unpriced? How do on-auction market orders impact the indicative price and volume in pre-auction? I've tried looking for reference materials for days, with no success. Any help or guidance much appreciated.


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## peter2 (15 July 2020)

Market orders that are placed into an auction will be matched to the auction closing price. Depending on the available volume they may not be completely filled. I'm not sure market orders in an auction can force the auction closing price to go higher/lower so that they're completely filled. I think not.


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## kkhliew (16 July 2020)

peter2 said:


> Market orders that are placed into an auction will be matched to the auction closing price. Depending on the available volume they may not be completely filled. I'm not sure market orders in an auction can force the auction closing price to go higher/lower so that they're completely filled. I think not.




Thanks peter2. I suspect that's the case too, in fact I can't think of other ways market orders could be incorporated into the auction order book. Still, I can't find any documentation from LSE to confirm that's the case (or other similar exchanges). It's also slightly counter-intuitive to think that very large market orders won't have any impact on auction price, as is the case in continuous trading.


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## peter2 (16 July 2020)

Insto's, market makers and knowledgeable traders won't be placing market orders in an auction because they won't know what they're going to get. I was surprised to read that market orders were even allowed to be placed in the auctions.


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