I purchased 1600 shares of JAYKAILASH on 1st April at 11.11, and sold them on 2nd April at 11.40. Now I got email regarding short delivery intimation on 2nd April at 10.25PM. Yesterday, 7th April, I got another email containing auction contract note in which 1600 shares were purchased @13.60.
Now my question is that the shares which were purchased on 1st April, they should have gone to auction too. Did zerodha made attempts to sell them in auction on 6th april or 7th april.
Secondly, if they could not be sold in auction, then shouldn’t I be getting 20% more than settlement price as auction could not happen. And why I am given delivery of the shares despite these two things.
Thirdly, in T+1 Settlement, at what time does the delivery of shares takes place. Is it during market hours or after market hours?
I don’t want delivery of shares. And short delivery hasn’t happened for first time. Usually the purchased shares are sold in auction or cash settled by 20% above the price. Kindly clarify why I was given delivery of shares
You bought shares from someone (Seller A), and that seller failed to deliver. So exchange arranged shares via auction to give you delivery.
At the same time, you sold those shares to someone else (Buyer B). But because of the settlement holiday, your shares were not yet credited. So from the exchange’s view, you failed to deliver to Buyer B.
Because of that, auction was done for your short delivery (your sell side), and shares were bought at â‚ą13.60 and given to Buyer B. That cost came to you.
Your bought shares don’t “go to auction” because you are the buyer there. Auction is only for the side that fails to deliver.
You didn’t get 20% cash because auction succeeded. That rule applies only if auction fails.
You got delivery because exchange managed to arrange shares and if shares are available, they will always deliver them.
Shares in T+1 are credited after market hours.
In short: seller failed to give you shares, and you (due to holiday timing) failed to give shares to the next buyer and the loss is calculated on your side.
I get why this feels unfair, but the rule is the same for everyone you’re just seeing two sides of it.
When Seller A failed to deliver to you, it did go to auction. That auction was done to arrange shares for you so you can receive delivery.
When you failed to deliver to Buyer B, it also went to auction but this time to arrange shares for Buyer B.
So auction happens in both cases. The difference is:
In your buy transaction, auction is done to give you shares
In your sell transaction, auction is done to take money from you and give shares to the next buyer
You’re involved in both chains:
As a buyer (you benefit from auction)
As a seller (you pay for auction)
In your case, auction succeeded on your sell side (â‚ą13.60), so that loss came to you.
So rules are consistent it’s just that you were on both sides of the system at the same time, and the loss shows up where delivery failed from your end.
its not happening this for first time. I remember few years back with another broker I purchased a stock at 1000 and sold at 1020, and same case happened. For purchased leg, I got 1170 something, and for sold leg, I had to pay 1250 as auction. Though, there was some difference, but originally purchased shares did got auction treatment.
My question is simple - Why didn’t the originally purchased shares at first, did not go into auction. I am involved in both trades, unfairness- they don’t matter
Its not a question of loss. I sold them yesterday at 13.25 with small loss, Forunately, market also increased in last fewa days helping me. but sometimes I do BTST with much bigger amounts. If anything happens in that case, it will be a huge loss. So to prevent that getting full knowledge is better
This is what I understand, your buy didn’t get auction benefit because both trades were in the same settlement cycle ( because of April 1 settlement holiday) and got netted, so only your sell-side obligation went to auction.
I don’t think anyone is responsible in this system. It’s how settlement rules are designed. You just need to be aware of BTST risk, especially around settlement holidays.
The thing is if shares are in your demat, you can also try to sell at auction to some poor chap, who failed to deliver. If you’re asking who gained, it’s the guy who got the shares in his demat and sold it at auction at a premium.
Speaking from the other end, 20% filter is very low IMO. I would prefer 50%-100% to be worth it to participate in this market, because stocks that usually end up here are penny stocks and sometimes in circuits. 20% can be had in a day if it’s in circuit. Considering short term taxes as well, 20% is bery bery low…
I don’t think settlement holiday affects the credit of shares, because based on this post👇, the order of settlement takes cares of this. Which is probably why Zerodha allows BTST even on settlement holidays.
So, the risk of BTST soley depends on the delivery by the original seller, if he defaults, it affects everyone in the BTST chain.
BTST always carries an inherent risk, i.e., if the original seller defaults/short delivers, the shares never reach your demat, and when you sell these shares on the next day, your sale will also result in a short delivery.
In essence, when you are doing BTST, if your seller short delivers, you too end up short delivering on your sales.