All shippers need to balance their gas shipments through the pipeline system, namely to maintain their input and withdrawal of natural gas below a specific tolerance level on both a daily and monthly basis. Shippers can balance their system by buying or selling gas in the highly liquid on system market where the price of natural gas determines the cost of maintaining their balance. But shippers do not always maintain their daily balance and the whole pipeline system may become unbalanced if the sum of individual imbalances exceeds a certain tolerance level. The pipeline operator must then inject or withdraw natural gas to restore the balance. The value of the natural gas in these transactions is not reflected in the on-system price. To facilitate the pricing of this gas the flexibility mechanism was introduced in 1996 in the UK. The flexibility mechanism allows market based determination of the value of the natural gas needed to restore the balance in the pipeline system. This gas is traded in an auction and interested bidders post their bids specifying volumes and the price at which they want to buy or sell. The pipeline operator buys gas if it expects that injections into the system will be less than withdrawals and vice versa.