How auction rate penalty is calculated?

How auction rate penalty is calculated?

There are two scenarios for calculating the auction rate penalty:

1. Internal Auction:

  • T+2 Closing Price + 7%: This refers to the stock's closing price on the second trading day after the transaction (T+2), with an additional 7% added.
  • Highest Traded Price between T and T+1 day: This is the highest price at which the stock is traded between the transaction day (T) and the next trading day (T+1).
  • Whichever is Higher: The higher value between the T+2 Closing Price + 7% and the Highest Traded Price between T and T+1 day is used to calculate the penalty.

2. Market Auction:

  • Highest Traded Price between T and T+1 day: This is the highest price at which the stock is traded between the transaction day (T) and the next trading day (T+1).
  • Official Auction Market Closing Price on T+2 + 20%: This is the closing price in the auction market on the second trading day after the transaction (T+2), with an additional 20% added.
  • Whichever is Higher: The higher value between the Highest Traded Price between T and T+1 day and the Official Auction Market Closing Price on T+2 + 20% is used to calculate the penalty.

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