Also known as descending price auction. A type of offering which uses a bidding process to find an optimal market price for a security, the highest price at which an issuing company can sell all the available securities. In a Dutch auction, the company offers its securities for bid at a high price. The initial price is high enough that the company does not expect to sell any securities. Because bidders must know the amount of the bids, bids are not sealed as they are in some types of auctions. The company lowers the price until someone agrees to buy securities and continues to lower the price so that more investors agree to buy securities. The company continues to lower the price until all of the securities being offered are spoken for. At auction's end, the company sells all of the securities it planned to offer, and the bidders get the number of securities they agreed to buy, but all at the price bid by the last bidder. An alternative to the traditional negotiated pricing process used by underwriters to set IPO prices, it was most recently used by Google and is used for US Treasury auctions.

For more information on dutch auctions, see Practice Note, Conducting an Issuer Tender Offer for Debt Securities.