Did any one face problem or did anyone pay fine for BTST . Is it too risky?
The risk with BTST trades is that since you are selling shares that aren’t in your DEMAT account yet, you are relying on the seller whom you bought the shares from to deliver you the stock. If the seller defaults on giving you the shares on time i.e in the event of short delivery, your obligation as a seller to deliver shares won’t be met and you will face the risk of auction penalty which can be up to 20% of the value of stock short delivered. Do go through this comprehensive blog on BTST and the risks involved.
If you’re trading in liquid stocks, with volumes of a million or more - like NIfty 50 stocks, the risk is reduced. But if you’re unlucky, it may still happen.
Thank you . I know about BTST but is it really too risky I am asking . Is there any case study such?
@Shivanand1 ; unless you do BTST in thinly traded shares there is only a notional risk of your sale position will be auctioned. i have done many times even in T2T group shares but never faced any auction issue. many brokers do not entertain BTST in T2T group shares as there is no auction but square off where short selling penalty can be much higher compare to auction.