In this process short delivery is settled by the Member broker internally among his clients instead by the exchange through buy-in auction.
Suppose ‘A’ & ‘B’ are clients of the same broker. Client A has bought 100 shares of RIL for delivery and on the other side of that trade B has sold 100 RIL.
There has been short delivery of 100 shares of RIL from client B. In such a case, the broker will buy 100 shares of RIL for client A on T+2.
In addition to the 100 shares, client A will also get a credit of 3% of the buying price in his account. An amount equivalent to the shares buying price + 3% of the buying price is debited from client B.
Monday: A bought 100 RIL @ Rs 800 (and B sold to A)
Wednesday: B failed to deliver the shares
Since A and B are both clients of the same broker, the shares will not be delivered by the exchange and the settlement will have to be done by the broker internally.
Let’s say the price of RIL on Wednesday was Rs 850. We as a broker will buy the 100 RIL @ 850 for A in his trading from the market at the current price.
So in A’s ledger there will be a debit entry of
850 x 100 = Rs 8,50,000 + statutory expenses
At the same time there will be a credit entry in A’s account of
(850 + 3% of 850) x 100 = Rs 8,75,500
At the same time since B had caused Delivery shortage, B will be debited Rs 8,75,500 as auction penalty
In nutshell, client A receives 100 RIL and an additional amount 8,75,000 – 8,50,000 = Rs 25,000*
In case we are unable to buy the shares in A’s account due to reasons like low liquidity, upper circuit or any other reason, we will close-out the trade on the auction trade day (T+2). Hence in such a scenario A will not receive the shares but will receive a credit in his/her account of an amount equivalent higher of
T+2(i.e. Auction trade day) closing rate of that scrip + 10%
the highest price prevailing in the NSE/ BSE from the first day of the relevant trading period till auction trade day
Similarly, B will be debited of the same amount.
*Statutory charges and brokerage will be as applicable
What is Short Selling of shares?
What can cause a Short Delivery?
What happens in case of Short Delivery?
How does the auction process work in case of short delivery?
I bought Monday share ,(delivery) of PNB housing at 678 .next day tudesday I sell this share at 725. But on Wednesday se share sell at auction at 850? In this case what is my profit or loss?
Sorry to say but we didn’t get the calculations mentioned by you. As per your message, it seems that you have done Buy Today and Sell tomorrow (BTST) transaction which has resulted in to short delivery. For your information, the Exchange doesn’t specify the price at which the auction will take place. Generally, the maximum auction penalty can be of Rs.20% higher than the closing price of the share on the day prior (T+1) to the day of auction. For e.g. If the closing price of ABC scrip on T+1 was 100 then the upper limit for an auction will be 120(100*20%). Please click here to know more on auction settlement. You shall receive the contract note for Auction settlement today. Please write us at email@example.com along with your client details so that we can look into the exact case and assist you accordingly.
I have received less shares for one of the scrip ie ingersoll rand . The shares were delivered on T+ 3 instead of T+2. On T+3 broker informed me that close out will happen howver in t+3 they gave me credit of shares. What are the options available to me. Coz with close out i should get higher price. By giving shares in t+3 i will be at loss and will not receive close out of higher price
Kindly share your client ID, we will check and let you know.
What will they do in case of stock price getting down about to 5% Lower circuit at the time of Auction.The reason of auction or closing the deal due to upercircut on stock.
Can you please elaborate your query?
Sir, Thanks for reply
Broaker is one and same but the accounts are two (one mine and other my wife).
Thanks and oblige
Sir, Thanks for reply.
I have already have Yes bank in my Pool account and we’re not short. Your reply is for general Script and my question is for specific Script (Yes Bank) sold on 16/03/2020.
Sir, Can it be possible that one script (Yes Bank) sold on same date (16/03/2020) in two separate account and auctioned on 18/03/2020 at different Rate I.e. One at 61.6 (internal short) and 71.7 (market short).
Your reply is valuable for me.
Thanks and oblige
You had sold Yes Bank on 16-Mar-2020 with two different brokers and auctioned on 18-Mar-2020. In this case, the settlement price shall change because one broker had settled internally as per the market prices available while settling the order and applies the penalty on that price. In the other broker the settlement is market short. Broker takes the highest price from 16th to 18th and applies penalty on that highest price. Hence, in the scenarios shared by you, the auction rates shall be different.
As on 15/03/2020, my wife has 500 shares of Yes Bank in Pool Account. On 16/03/2020, 125 Shares of Yes Bank (25℅ of 500) sold from this account after 10 AM. I came to know on dated 18/03/2020, 51 shares has been auctioned in my account at rate of Rs. 61.60. I was very much shocked, as I sold only 25% shares of yes bank as per corporate arrangement. Now latest statement they shows 424 shares of Yes bank in old ISIN in my pool account. Even they have not issued Contact Note for the above transaction.
And in my other account, I sold 600 shares of yes bank (1400 in pool account and 1000 in dimag account) on same date, but they auctioned 251 shares from my pool account statement rate of Rs. 71.69. No contract Note was issued.
When asked how is it possible two rate of auction of one script, they told in 1st account auction is done internally at 5% above the closing price of 17/03/2020 I.e 58.65 which comes out rs. 61.58 but they rounded it Rs. 61.60.
In 2nd account auction is done in market at rs.71.69 (WAP) highest in 17/3/2020 closing price rs. 58.65 and WAP 71.69. It is interesting to note they did rounded it to 71.7 like 1st account. Also no contract note was issued.
I think they have done something wrong transactions in my account, please give clarification.
Thanks and oblige
Usually, auction takes place when you sell the stocks before taking the delivery from the exchange. Ex: If you buy on Monday, you shall receive the shares from exchange on Wednesday(if no holidays in between). If you sell the shares before getting the delivery from the exchange, say for example on Tuesday then there might be chances of auction. As you mentioned, the shares were in pool account and not in demat account. Hence, shares might have gone to auction. Your broker might have provided you the back office login. You may login and check your transaction details. If you have an account with us, kindly share the client code, we shall check your account details and let you know.
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what is the process of bse auction
There no change in the process of auction in case of BSE. The same process is been followed in case of BSE auction as mentioned in the above article.
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in column select cal delta not working, how to activate it?
We are sorry for the delayed reply. An option calculator is a tool which is used to calculate the theoretical option premiums considering factors such as strike price, volatility, term to maturity etc. It considers sensitivities in market known collectively as “Greeks” represented by Delta, Gamma, Theta, Vega and Rho. For detailed information on option calculator, we request you to refer the http://www.nsepaathshaala.com.
We also request you to send us an attachment at firstname.lastname@example.org for non-working of Delta in option calculator so that we can check and assist you accordingly.