What is a Dutch Auction?

A Dutch auction is an auction in which the auctioneer begins with a high asking price and lowers it until some participant accepts the price, or it reaches a predetermined reserve price.

This has also been called a clock auction or open-outcry descending-price auction.

This type of auction is good for auctioning goods quickly.

Dutch auctions are the reverse of English auctions whereby the price begins high and is systematically lowered until a buyer accepts the price.

The U.S. Treasury uses a Dutch auction to sell its securities. To help finance the country's debt, the US Treasury holds regular auctions to sell Treasury bills (T-bills), notes (T-notes), and bonds (T-bonds), collectively known as Treasuries. Prospective investors submit bids electronically through TreasuryDirect or the Treasury Automated Auction Processing System (TAAPS) which accepts bids up to 30 days in advance of the auction.