Offer for sale: Retail investors get one more bidding option

Our Bureau Mumbai | Updated on December 02, 2014 Published on December 02, 2014

Besides, making price bids, retail investors can opt for the cut-off

Sellers going in for the offer-for-sale (OFS) route through the stock exchanges may give an option to retail investors to place a bid at the cut-off price, in addition to price bids.

This has been done to make it easy for retail investors to participate in the OFS mechanism, said a SEBI circular.

For doing this, sellers have to mandatorily announce the floor price by 5 p.m. a day prior to the OFS. Exchanges would decide the quantity of shares to be earmarked for the retail portion based on the floor price.

There would be no indicative price for the retail portion of OFS, and retail investors have the option to enter a price bid or bid at the cut-off price.

Margins to be brought in would be computed at the floor price for bids placed at cut-off price. For price bids it would be computed at the value of the bid.

Allocation to retail investors would be done based on the cut-off price determined in the non-retail category with the option of offering a discount to the cut-off price resting with the seller.

Retail bids below the cut-off price would be rejected and bids at cut-off price would be proportionately allocated in case of over subscription. The unsubscribed retail portion after allotment would be available for the non-retail category.

Clearing corporations should collect margins to the extent of 100 per cent of order value in cash or cash equivalents with pay-in and payout taking place according to normal secondary market transactions.

Published on December 02, 2014
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