Could see a article if i sell the shares before delivery. In this context I have few doubts,
How to know which is a group A or group B stock, does Zerodha is displaying this information in their portal?
Based on the below mentioned article all the Group A and Group B stocks are meant for the auction penalty that may arise because of short delivery?
2.1) Even the stocks which are of higher volumes of Group B will also come under this?
2.2) Say if a stock has hit upper circuit on T+1 before delivery and if i sold it how are the chances of auction?
2.3) When will I know that my stock was auctioned and at what is the loss i got, where can i see?
2.4) Does the following scripts have the risk of auction penalty if i sell before T+2 delivery?
Basically what you need to remember is that when doing ATST/BTST trading, try trading only on liquid A group stocks, because the short delivery risk is reduced and hence chances of you having to face an auction penalty. The auction risk goes up quite a bit when you trade ATST/BTST on illiquid stocks. Please note that whenever you decide to sell stocks before taking delivery, you are taking the onus of any auction penalty that may arise because of short delivery.
Click here to know how to find the stock category. If a stock you’re buying is a trade to trade category, we push a nudge on Kite as shown-below.
Irrespective of the stock category auction penalty applies to the short delivery. It consists of two things one is the difference between the selling price & auction settlement price and, 0.05% of the value of stock per day the defaulting party has failed to deliver.
2.2 Can you please be specific with trade day, trade type (Buy or Sell).
2.3 T+3 EOD when you get the auction settlement contract note over mail.
2.4 All the stocks have the risk of short delivery, in turn, the risk of auction penalty. Even if there is good liquidity if the other party defaults it will be a short delivery. However, It is observed that high liquid A/B/EQ category stocks have a very small chance of being short delivered.
This article has complete information on Short Delivery and it’s Settlement.
Hi Gouda. I am sure you might be aware of the mishap on 18th of march due to which a lot of clients had to go through the short delivery auction. Now the issue is that currently zerodha has debited exactly whatever was the highest price on T (18th March) ,T+1 or T+2 day . And in a lot cases it is above 20 percent of T+1 closing price thus proving that the debit cant be the correct auction price (ZEEL , IDFC FIRST BANK etc). It seems more like some conservative debit amount being blocked by zerodha’s system. Also clearly the current process doesn’t follow the documented articles where you are supposed to block T+1 closing price as valuation debit on T+1 day itself. The debit was made on 27th of march . No idea why was that done but there has not been any reversal made on the basis of actual auction price settlement and its been more than three days since that. If only you guys could come with a clear picture than making us sit in the dark for past 10 days . Also please post the auction prices of all the securities that happened on 20th of march for short delivery on 18th of march so we can reconcile and know what to expect back. That would clear a lot of confusion. Right now the process lacks transparency. Just an honest feedback. Thanks
@VenuMadhav . Please look into the issue mentioned above and help to expedite the process. @nithin it would be really helpful if you could enlighten us on all the operations and issues mentioned above . Expecting to hear back from you soon. Otherwise i have no clue about whom to contact anymore. This has already given us a lot of headaches during the past few days. I hope this is not too much to ask of you . Thanks
@VenuMadhav@nithin . This internal netting off turned out to be a lot more expensive then. Like normally in auction for liquid stocks you end up paying ±3% of t+1 or t+2 closing prices. But this time its touching the roof and mainly because you have taken the highest rate on 18th and market crashed on that date and post that. Why didn’t you guys just let it settle in the normal auction market. This has cause so much unnecessary losses to all of your clients.
Just take an eg. IDFC first bank .why should someone pay 26.35 when the eod prices on T+1 and T+2 date was 20.6 . do you see its 30 percent different. Where does this 30% go then. to the buyer or to the broker?
This does not sound like a right explanation and the right solution. Can you please check and confirm.
okay. already raised a ticket but i have been just given a generic reply quoted below without even looking at my actual query .Should i share the ticket with you. Thanks
Also in case of internal netting off doesn’t the broker try to purchase stocks for short delivery on t+2 or t+1 first before closing out? Like why would you close out when you can clearly see its a lot more expensive and unfair. I can’t make a bit of sense out of it of this entire fiasco. Also please answer who gets the the 30% cut in the above case. This has started to sound a bit fishy now.
"Thank you for writing to Zerodha.
There is no fixed price for the Auction to happen. The exchange specifies a range within which the auction participants can offer to sell their shares.
Upper cap of the range: 20% higher than the price that it closed on the previous day of the Auction.
Lower cap of the range: 20% lower than the price that it closed on the previous day of the Auction."
okay but how can it be a bad delivery when you could have easily bought it off the markets on the next day cause all of them were very liquid stocks. seems like some more issues at your end . Or again why didn’t just let it go to normal auction market like the usual scenario? This is not reasonable and acceptable and realistic at all. I think this incident needs to be raised. @nithin I believe you are very good at reasoning. Don’t you see the flaw in the entire way this has been handled. like first there was a glitch and then auctions were settled in a very unfavorable way. **Like seriously WHY?**I am realizing huge losses because of this. I want this to be settled fairly and reasonably.
Also you have not solved the issue in above mentioned example. How can the auction price be more than 20% of T+ or T+2 price.
The Exchange nets off transaction at a broker level, not at a client level. So if you’re short and some other client of Zerodha buys, then there’s no obligation from Zerodha and hence there’s no case of auction.
How do you expect me to help you out on a public forum without knowing any information of your account? Precisely why I’ve been asking you to raise a support ticket. You can draw reference to our conversation here.
Okay but internal settling also allows zerodha to transfer shares to the buyer on T+3 day on behalf of the seller. why didn’t it even come into the picture? You do see right you could have settled this in a better way for both buyers and sellers.
That’s the usual practice adopted where the buyer gets the stock with a one day delay. However in such volatile we didn’t want to risk, since there’s no default from the buyer, he shouldn’t have to suffer for a drop in price (if any) owing to the short seller not delivering on time.
I’ve made note of your ticket number, we’ll arrange for someone to respond.
Same story happened with my friend ,he baught 100 share of jyothi lab on 1 st [email protected] and sold it on next day 94.70 on next trading day that is 3 nd april (t1) and jyothi lab closed on93 on t1 & t2 was seedha 7april that is monday and xlosed around 95, t3 8th april closed on 100…
As per broker because of somany holidays there wasnt jyothi lab in his demat on the day of delivary… Hence going for auction trading buying they told…
My question is in such massive upward trend (closed around100) in jyothi lab that too T3 ,T4,T5 Onwards(T1 is closed below his buy price) and T2 Closed below is his sold price
Did he gained or he made massive profit or booked maasive loss dont know,that to being called by auction market?
Where did those 100 share gone then? In whose account those 100 shares credited? Not in my freinds demat…buyer got fresh auctioned baught 100 share…where are those 100 gone? Broker house or exchange (NSE?)