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I am looking at the details of some futures contract traded on Bovespa, a Brazilian exchange. In the "trading hours" section, I do not understand two things:

  1. What is the "electronic call" at 17:55?
  2. What are the "daily calls" at 11:30 a.m. and 3:30 p.m.? (See footnote 2.)
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Brazil is a special case.

They use a Walrasian auction, pronounced with a "V", to open & close the market and provide a venue to clear large orders as opposed to a continual double-sided auction that the rest of the world uses.

The theory is that the value thus quantity of all bids shall equal all asks to discover an equilibrium price as opposed to the traditional Marshallian supply & demand curves theory that most in the developed and now rest of the world are familiar with.

Therefore, to open & close the market in Brazil or take part in large trades, traders initially bet blind or according to an initial price on the bids and asks then the exchange adjusts this price downward if an excess of supply or upward if an excess of demand, and the bids and asks are resubmitted with the process repeated until the quantity demanded equals the quantity supplied where the auction finally clears, more or less matching all orders. During trading hours, continual double-sided auctions for small orders also take place.

Walrasian auctions are a hangover from the Dependency Theory days of Latin America, and ironically, Walrasian supply & demand curves were subscribed to by Keynes thus "socialists" and "communists" of the time even though Walras's theories mainly constructed marginalist thought which is a dominant theory in "capitalist" economics even though it was not intended to be applied to Marshallian curves. "Capitalists" tend to subscribe to the more well known Marshallian supply & demand curves theory as the determination of equilibrium.

The reason why Walrasian curves were chosen is because it is believed that they could help counteract the effects of Dependency, that the "artificially low" price resulting from Marshallian curves could be risen to "fair" prices. Neither theory has been extensively shown to be superior; furthermore, they seem to produce the same equilibrium price with less variance for the Walrasians and more continuity for the Marshallians.

  • I don't think either of the calls (at 11:30, 15:30 and 17:55) at used to "open the market in Brazil". Instead I think the opening auction is a traditional Marshallian open-book auction. – Randomblue Feb 4 '14 at 11:46

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