BTST general query

Suppose I buy a stock on Monday and sell on Wednesday morning at 10 AM. Will it be considered as a BTST trade? Since delivery usually happens on Wednesday afternoon.

Will short delivery penalty occur in this scenario ? Because though its T+2, technically its still T+1 in the holdings?

Please clear my doubt.

If you sell shares before they are settled into your Demat account, they will be considered as BTST trades irrespective of you selling on T+2 day. And in case there is a short delivery then yes auction penalty will occur.

It is advisable to sell your shares after they are credited to your account if you wish to avoid the risks arising out of BTST. You can read about BTST and it’s risks here.

@Navana_N There is no such risk in Futures right? because of T+1 settlement. I can do BTST there without any fear of penalty?
One more question is, if a security enters into FnO ban, we are allowed to exit our positions but not take any fresh positions. So, if I exit my position during ban period, will I incur considerable loss due to liquidity issue? Or it usually within 3-5%?