Stock Auto Rejection Rules
monarchcb.com - Stock prices cannot go up and down at will. There is an Auto Rejection provision that binds stock price movements every day. This post will discuss the terms of Auto Rejection in full.
What is Auto Rejection?
Auto Rejection is a provision that determines the maximum limit for escalation and depreciation of a stock price every day. The price of the sale agreement and or the request to buy shares that can be entered is the price of the offer which is still in a special price range. If the price instruction has exceeded the price limit, the system will automatically reject it (Auto Rejection).
What are the Types of Auto Rejection?
There are 2 types of Auto Rejection:
- Auto Rejection Up or often called Kiara is the maximum escalation limit for the stock price on that day.
- Basic Auto Rejection or often called ARB is the maximum depreciation limit for the stock price on that day.
Harmonious and Asymmetric Auto Rejection
Determination of Auto Rejection can use one of the following 2 various systems:
- Harmonious Auto Rejection is if the percentage of Kiara and ARB is the same size
- Asymmetric Auto Rejection is when the percentage of Kiara and ARB are not the same size
Usually in the legal stock market Auto Rejection Harmonis. However, when the stock market is in an unnatural condition, the IDX can inaugurate Asymmetric Auto Rejection. The illustration is like what happened during the end of the Covid-19 legal Asymmetric Auto Rejection.
Current Legal Auto Rejection Provisions
The following are the current legal Auto Rejection provisions in the stock market:
- For the share price group at the base of IDR 200, the maximum escalation limit is 35% and the maximum depreciation limit is 7%
- For the share price group of IDR 200 to IDR 5,000, the maximum escalation limit is 25% and the maximum depreciation limit is 7%
- For the share price group above IDR 5,000, the maximum escalation limit is 20% and the maximum depreciation limit is 7%
- Not only that, the instruction will be automatically rejected if the price of the sale or purchase agreement of shares is less than Rp. 50. In other words, in the regular stock market, we cannot buy or sell shares at a price below Rp. 50.
Illustration of Auto Rejection Application
The illustration is that yesterday's share price of BMRI closed at Rp. 6,000. So, BMRI's shares are included in the price group above Rp. 5,000. Thus, the price of BMRI's shares today, can rise to a maximum of Rp. 7,200 (Kiara 20%) or down to a maximum of IDR 5,600 (ARB 7%).
Note that the Auto Rejection limit is always recalculated every day, as a result, it always changes.
Auto Rejection for IPO Shares
The Auto Rejection application for trading shares resulting from an ordinary Ijab or IPO listing for the first time on the money market (first trade), was inaugurated at 2 (2) times the percentage of the Auto Rejection limit above.
For example, there is an IPO share on the first floor in the money market at a price of Rp. 100. The share is classified as a share at the base of Rp. 200. Until the special upper limit for the first day is 2 x 35%. As a result, the stock price can rise up to 70% on the first day of trading.
Auto Rejection Create Acceleration Stock
Acceleration shares have special conditions on Auto Rejection, namely for 10% ARB and 10% Kiara. So the stock price of the accelerated residence will be affected by Auto Rejection if it drops by 10% or increases by 10%. On the other hand, the lowest limit for acceleration shares is Rp 1.
