Sealed Bid Auction

This Issue in United States

Concept of Sealed Bid Auction in Futures Trading

In this context of financial law, the following is a definition of Sealed Bid Auction: A form of auction where buyers submit one concealed bid (or sellers submit one concealed offer, in the case of a reverse auction). After a round of bidding has closed, submitted bids are compared and the person with the highest bid wins the award and pays the amount of his bid to the seller. (Again this process is reversed in the case of a reverse auction.) In a sealed bid, market participants cannot see their competitors’ price submissions so they must base their own submission exclusively on their own willingness-to-pay for the auctioned item.