What is the French auction?
French auctions are types of uniform prices auctions that are often used to create the structure of initial public offers on an option on the share in the nation of France. The basic process of the French auction is to determine what is known as a minimum or reserve price for each share available as part of the offer. Offers are then collected from investors and data are used to negotiate minimum and maximum prices of shares with market regulator. In France, there is a regulator with which the IPO company works, known as Societe des Bourses Francaises , or simply as SBF.
In real practice, offers are offered within the French auction approach. This means that no third parties are published at the time they are submitted. Only when a company that announced IPO uses data to set the minimum Amaximal price that is provided by Tto a river regulatory body. After reviewing the data, the regulator of the market for the price range setting on the IPO is cooperated with. In general, all offers that are above the maximum price agreed by the company and regulator, and the applicants pay the minimum price, and the shares were awarded using the for Rata . This means that shares are awarded on the basis of a proportional basis using the original offers and shares required by each candidate as a guide.
In some cases, the response to the French auction can generate an extremely high demand for stocks offered within the IPO. In the case of this, the strategy of the repair may be minimum and the maximum price is discarded. In this scenario, the initial public offer is shifted to a fixed price offer and candidates are offered shares for this fixed rate on the share, again using access to RATA to determine the number of numerical number offered to each candidate.
while indicating howThe French auction, this approach to offering shares in the initial public offer is employed in a number of nations around the world. The use of this auction model is controlled by regulatory agencies in countries where the process is recognized and approved by these agencies. In some cases, the company may not be authorized to use the French auction model based on the criteria set by the ruling regulatory agency. Brokers and others who help to solve the initial public offers will know whether this type of auction format is viable for a company that creates the IPO concerned.