Short Delivery

Alchemist

Administrator
Staff member
#41
I sold page ind 60 shares @ 2332 on 10th Aug, 2011. I want to know, how much I could need pay or they going to debit my account? Please any one help in this. Even though approximate.
You will lose around Rs 230 per share.

This is just a guess.

Your final loss will depend on the price of the stock on auction day (12th August).
 
#42
Short Sale

I sold page ind 60 shares @ 2332 on 10th Aug, 2011. But I got credit in my account, on the same day after consolidation. What's that I didn't understand, are they going to withdrew that amount or what?
 

Alchemist

Administrator
Staff member
#43
I sold page ind 60 shares @ 2332 on 10th Aug, 2011. But I got credit in my account, on the same day after consolidation. What's that I didn't understand, are they going to withdrew that amount or what?
No.

This amount will not be withdrawn.

First, your broker will make a "valuation debit" from your account.

This may be as high as 150% of the "Valuation Price".

The shares that you sold short, will be bought in an auction and the bill will be sent to you.

After the auction is complete, the valuation debit will be reversed and the auction amount will be debited from your account.

Thus, 3 more entries will be made in your account:

1. Valuation debit.
2. Valuation debit reversal.
3. Final auction debit.
 
#44
Short Deleivery

Hello

I want to understand the issues in short delivery.

I have sold 25 shares of Grasim in 2142 rs and could not buy them.

Now what could be the problem.

Gaurav
 

Alchemist

Administrator
Staff member
#45
Hello

I want to understand the issues in short delivery.

I have sold 25 shares of Grasim in 2142 rs and could not buy them.

Now what could be the problem.

Gaurav
Depending on whether the shortage is at broker level or exchange level, the broker or the exchange will buy the shares in an auction and you will have to pay for these shares.

The auction will be held on T+2 day.

When did you sell these shares?
 
#46
Short Delivery-Please help

Today I have sold 250 Nos. of shares of Jaypee Infratech Ltd.in NSE but could not be able to buy the shares (i.e square off my positions) on the same day.

What are the consequences of it?
When this problem be settled?
What are the hidden charges and Penalty- behind it?
What will be the Maximum LOSS for it?
Will there any legal action /other penalty be taken for this transaction under any law (like SEBI,NSE,IPC Laws)?
Will I be debarred in future from trading in stock market?
Please let me know. I am really worried.
Thanks in advance,

Risab.
 

Alchemist

Administrator
Staff member
#47
Today I have sold 250 Nos. of shares of Jaypee Infratech Ltd.in NSE but could not be able to buy the shares (i.e square off my positions) on the same day.

What are the consequences of it?
When this problem be settled?
What are the hidden charges and Penalty- behind it?
What will be the Maximum LOSS for it?
Will there any legal action /other penalty be taken for this transaction under any law (like SEBI,NSE,IPC Laws)?
Will I be debarred in future from trading in stock market?
Please let me know. I am really worried.
Thanks in advance,

Risab.
You will find most of your answers if you read the thread.

The shortage will be either at broker level (internal) or at exchange level.

If it is an internal shortage, the consequences will depend on your broker's policies.

Exchange level shortages are settled by auctions.

Two trading days after the trade date (T+2 day), the exchange will buy the shares from the auction market and you will have to pay for these shares.

Maximum loss can't be calculated. It will depends on the price of the stock two days from now.

Other than the financial loss, you need not worry about anything else.

Short deliveries happen every day at the exchanges. Hundreds of traders give short delivery every week.
 

Rks

New member
#48
I have done short selling of 150 Jaypee Infratech in margin trading and could not squared off due to upper circuit. What strategy I should opt to minimize my losses? Whether I will be able to buy the same quantity tomorrow so that I could get some gain from that shares?
 

Alchemist

Administrator
Staff member
#49
Whether I will be able to buy the same quantity tomorrow so that I could get some gain from that shares?
That's a very difficult question to answer.

The stock is already volatile. Making short-term predictions about stocks isn't easy, especially about volatile stocks.

The stock can go anywhere after you buy - up or down.

It may also happen that the stock's market price falls after you buy tomorrow, but your auction price turns out to be much higher than the market price.

I have no idea where the stock will be on auction day (Wednesday), but if I were in your place, I won't trade this stock now.
 
#51
Auction price determination.

Thank you for your guidance sir.

Now I want to know how the auction price will be determined in NSE and when the auction will be held? (I made the short delivery on yesterday, i.e on 17.10.2011)?

Could you please tell me the procedure of auction in NSE?

When I will be able to know the auction price and the loss thereafter?

Please let me know.

Thanks,

Risab.
 

Alchemist

Administrator
Staff member
#52
Now I want to know how the auction price will be determined in NSE and when the auction will be held? (I made the short delivery on yesterday, i.e on 17.10.2011)?

Could you please tell me the procedure of auction in NSE?

When I will be able to know the auction price and the loss thereafter?
For a trade done on 17th, auction will be held on 19th and settlement will be done on 20th.

If your broker informs you, you will know the auction details by 19th night.

Otherwise, you can check your ledger on 21st morning. The auction entry will be done in it by 20th night.

Auction market is a separate market. The price of the auction is determined from the offers made by the sellers. The lowest sell offers are selected.

The prices offered by the sellers have to be within the permissible price band (cash market price band) for the day.

The buyers have to buy the shares, no matter how high the offered price is.
 

Alchemist

Administrator
Staff member
#55
What can be the maximum penalty for the short delivery?
You mean what could be the maximum auction or close-out price?

It depends on the stock.

For stocks in the derivatives segment, theoretically, the auction price can be anything. If the stock goes up 1000% in one day, the auction price would also be approximately 1000% above the selling price.

For other stocks, the maximum auction price depends on how high the stock can go between the day on which the shares were sold and the auction day.

For internal shortages, the maximum price depends on the policies of the broker.
 
#56
Voltas Short on 15022012

Hi Alchemist, I have short sell Voltas @ 105.77 on 15022012. But I could not squareoff it today due to some problem. The Stock has been closed @ 119.45.

Please let me know the worst scenario ? As per previous conversation will it end up with 20 % on 119.45 or 105.77 ?

The exchange will buy shares on your behalf from the auction market and give them to the buyer.

You will have to pay the difference between the rate at which your shorted and the rate at which the exchange has to buy the shares.

As SBI is a liquid scrip. your auction price will be 2%-5% above the current market price.

If the exchange is not able to buy shares in the auction market, it will settle the position in cash
-at the highest recorded price between the relevant trading period and the auction day; or
-at 20 per cent above the last closing price, whichever is higher.

Never ever give a short delivery. If the exchange cannot buy shares in the auction market, you may end up paying minimum 20% more than price you short sold at. SBI is a liquid scrip, so this will not happen in your case.

===================================

Besides the auction rate, you will also have to pay a small cash penalty for a short-delivery. Your broker will also be penalized. Brokers have a point system and get penalized in points. If their penalty points exceed a certain limit within a certain period, they have to pay cash penalty.

Thus brokers don't like clients who give short delivery. If you give short deliveries frequently, your broker may discontinue your account.
 

Alchemist

Administrator
Staff member
#57
Hi Alchemist, I have short sell Voltas @ 105.77 on 15022012. But I could not squareoff it today due to some problem. The Stock has been closed @ 119.45.

Please let me know the worst scenario ? As per previous conversation will it end up with 20 % on 119.45 or 105.77 ?
The auction will be held on T+2 day (17th).

The maximum auction price will be 20% above today's (16th) closing price or the highest price touched between trade day and auction day.
 
#58
Short Delivery - Could not square off

Dear Sir,

I have done 5 transaction of 100 shares each (scrip is jet airways) today i.e. on February 21, 2012 on NSE. First, i short sold 100 shares and bought 100 shares, thereby squaring off the first transaction. I again sold 100 shares and bought 100 shares, thereby squaring off the second transaction. I made a small profit on these first two transactions

I then short sold 300 shares at an average price of 352 odd, but could not square off by the end of the day. The closing share price today i.e. February 21, 2012 is 352.80.

In this scenario I wanted to understand

1. What is it that will happen to these 300 shares that I have short sold.
2. When will they get auctioned and
3. How would the price be determined?

I have read the post and this is what I understand, please correct me if i am wrong:

1. These 300 shares will be auctioned on T+2 basis i.e. they will get auctioned on February 23, 2012 and will be settled on February 24, 2012. Even if I buy the shares tomorrow (i.e. on February 22, 2012) at a price which is lower/higher than today's closing price of 352.80, the auction will not get affected and the auction will most definitely happen on February 23, 2012.

2. The auction may depend on whether it will be at broker level or at the exchange level. My broker is indiabulls and the exchange was NSE. so it may happen either internally at Indiabulls or on the exchange.

3. The worst case scenario in terms of price, could be that the 300 shares would be bought at the highest price of the day on February 23, 2012 (i.e. the T+2 day).

Please let me know if my understanding is right.

Regards.
Jaideep
 

Alchemist

Administrator
Staff member
#59
1. What is it that will happen to these 300 shares that I have short sold.
2. When will they get auctioned and
3. How would the price be determined?
Only 100 shares will be auctioned. You squared-off 200 shares and so you don't have to deliver them.

Auction will be held on T+2 day (23rd) and settlement of the auction will be on T+3 day (24th).

If it turns out to be an internal shortage, then the auction price (or close-out price) will depend on Indiabulls' policies for internal shortages.

In case the shortage is an exchange level, the auction price will be determined by the sellers in the auction market.

If the shares can't be bought in the auction, the position will be closed out.

http://www.nseindia.com/content/nsccl/nsccl_eqshortages.htm
 
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