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In a "Dutch auction" for new stock, individual investors place bids for shares directly. Each potential bidder i...

In a "Dutch auction" for new stock, individual investors place bids for shares directly. Each potential bidder indicates the price he or she is willing to pay and how many shares he or she will purchase at that price. The highest price that permits the company to sell all the shares it wants to sell is determined, and this is the "market clearing price." All bidders who specified this price or higher are allowed to purchase their shares at the market clearing price.

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A Dutch auction is a type of public offering auction structure where the price of the offering is determined after considering all the bids to arrive at the maximum price at which the offering can be sold. In this type of auction, investors usually place a bid for amount they were willing to buy in respect of quantity and price.

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