TraderStack

Subject to Sauda

Subject to Sauda is a grey market IPO deal on the shares themselves that only goes through if the seller actually receives an allotment. If allotment is zero, the deal is void.

More in “S”Sharpe RatioShort BuildupShort CoveringSIP (Systematic Investment Plan)SlippageSL vs SL-MSPAN MarginSpot Exchange vs Futures ExchangeSpot PriceSquare OffSTBT (Sell Today Buy Tomorrow)Stop-Loss OrderSTP (Systematic Transfer Plan)Strike PriceSTT (Securities Transaction Tax)Subject to SaudaSWP (Systematic Withdrawal Plan)

What It Means

Subject to Sauda is a grey market deal on IPO shares that only goes through if the seller actually receives an allotment. If the seller gets zero shares, the deal is cancelled outright, with no payment either way.

Example

A seller agrees to a Subject to Sauda deal at a premium of ₹40 a share over a ₹350 issue price, for one lot. If the IPO allots the seller shares, the buyer pays the agreed premium and takes the shares. If the seller gets nothing, which happens often in heavily oversubscribed IPOs, the deal simply doesn't happen and neither side owes the other anything.

Warning

Subject to Sauda isn't a guaranteed payout the way Kostak is. The buyer takes on the seller's allotment risk along with the market's mood, so the deal can fall through entirely.

← Back to Glossary