The exchanges decide on the allotment of OFS, hence it is out of the broker's control. The cut-off price is determined by the general (non-retail) category's bids. If there is a lot of demand for the OFS, the allotment price may go up. For further information on the allocation processes, read the following.
Either of the two approaches is used to determine the allotment.
i. Price priority (multiple prices) basis: Retail investors may be assigned shares at a discount to the retail category's cut-off price, regardless of the bid price they entered, or Retail investors may be assigned shares at a discount to the bid price they entered.
ii. Proportionate basis at a single clearing price: Retail investors will get shares at a discount to the retail category's cut-off price.
Retail investor bids will be rejected and will not be considered for allocation in the following scenarios:
• Retail investors must get at least 10% of the total offer amount. For the purposes of this definition, a retail investor is defined as an individual investor who submits bids for shares with a total value of less than Rs.2 lakhs across all exchanges. Bids in the retail category will be rejected if the total bid value across exchanges exceeds Rs.2 lakhs.
• Individual retail investors will be able to bid in both the retail and general categories. Bids in the retail category will become invalid if the cumulative bid value of such investors surpasses Rs.2 lakhs.