The concept of charging penalties which can be upto 20% of the marketvalue of the trade if the short stock is auctioned sounds very unfair to me.
Are these concepts or circuit limits and penalties for shorting universal to other exchanges like in US or other developed markets or only limited to Indian Exchanges only?
The term they use for short delivery is, Fail Trade or Fail to Deliver. If you search these terms on Google you will find many articles.
Check this article from Eurex Clearing on penalties for Fail Delivery.
Circuit Limit is a safety mechanism and is used at every exchange, unless you have been living under the rock you must have come across news of stock exchanges hitting circuit limit’s around the world in March, so it’s not limited only to India.