Clarifications on Short Delivery

[SG_13]

@niftymonk

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.

@niftymonk

BTST risk, especially around settlement holidays.

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.

Budget day trading

So budget day is a settlement holiday, which means the shares you buy today, we do not receive credit of them tomorrow, but instead on Monday. Tomorrow’s transactions are also settled on Monday. Essentially, we have settlements of 2 trade dates happening on Monday - Trades of Friday and Trades of Saturday. The order of settlement on Monday is as follows: Shares sold on Friday are debited Shares bought on Friday are credited Shares sold on Saturday are debited Shares bought on Saturday are c…

So, the risk of BTST soley depends on the delivery by the original seller, if he defaults, it affects everyone in the BTST chain.

@Aditya_Gupta

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

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.

What are the risks involved in BTST?