Hi ,
I short sell IREDA on Monday at an average of 83 rupees per share and it hits upper circuit.
When I contacted Zerodha they told it will go for auction and post that it will be settled. They blocked the margin by calculating price at 102 from my account.
On Wednesday I got a contract note of stating the price settled on 122 per share. And I have to occur a loss of 40 rupees per share.
When contacted Zerodha they told my auction never happened and I have to settled on 122 per share.
The share was trading between 2- 2:45 on Tuesday the very next day.
I am in deep shock why it is not auctioned on t+1 day. When asked for clarification they said that it has been settled on “Close out” price.
Now my account is in minus and they are asking me to pay the negative price. I have seen the same scenario happened to someone else and she has been charged 20 rupees per share. Why it is 40 per share for me?
@d_p
From this post, it appears that the various possibilities involved in shorting stocks were not apparent to you yet.
Any specific reason why you tried to short this stock without fully understanding the situation?
Were you going by someone’s recommendation?
Any other reason(s) why specifically shorted IREDA recently?
@cvs I have already gone through all this, how I can verify my trades aren’t square off or no auction happened for my short selling shares. Zerodha send a contract note of 122 rupees charged for each share. How I can confirm that exchange has charged this amount not zerodha.
Is there any way someone can check how many shared auctioned how many settled for cash. I need some transparency. How it is possible for someone charges are lower then mine?
I need detailed understanding how Zerodha has settled my trade. I am sure I wasn’t the single person whose position wasn’t closed that day.
And if someone trade also doesn’t auctioned then why cash settlement price is different for them.
Also I requested auctioned data for the next 2 days (12-13 dec) just to be sure that it is from Exchange side not something zerodha has decided and closed.
The NSE don’t have auctioned data for the said date
Post short selling on Monday i.e. 11 dec i contacted Zerodha the very next day (Tuesday ) about my position, they assured me that my position will be closed by day itself as the script was trading.
It’s not about trust it’s about transparency. I had all the rights to understand why other people position closed not mine or none of the position closed that day.
Let’s say there were 1000 shares in total for 10 clients went for auction by zerodha and only 500 settled in auction then rest 500 got cash settlement at “close out” price, in that case who decided whom share auctioned whom not. Why someone has settled with 20 rupees in difference and some with 40 rupees difference when the scenarios was same.
Also do you have any information how can I get my auction data ?
Interesting.
I wonder how they assured you that. (or did you miss any weasel-words in their response?)
Unfortunately, no.
Purely speculating here -
Perhaps first-come-first-serve was applied? (depending on when you had placed your original short-order)
Again, speculating here -
Based on the quantity/volume of asks at various price-points?
Are you sure that the 2 instances that were short,
both did not get auctioned
i.e. cash-settlement was triggered for both on the same day? (Based on my reading on the cash-settlement article by Zerodha,
it seems to me that cash-settlement price ought to be the same for all folks who are short of a specific security on a given day.)
The point i am trying to make is this -
In theory, knowing all this is good.
In practice,
knowing these details would simply provide some justification of the costs one faces.
Knowing the details of the auction
is not likely to help us take any corrective action
i.e. one should avoid taking such vulnerable positions that requires one to get shares from the auction.
Anyways, “good to know”… sure.
Let’s see if anyone who knows, cares to respond.
Whenever there’s short delivery, exchange tries to buy the shares in the market on T+1 day and deliver it to the buyer.
However, if exchange isn’t able to buy the shares in the auction, they will settle this transaction at close out price.
The close out price is higher of 20% of the closing price on day of auction or the highest price of the stock from trading day till the auction date. Please check out this article to learn more: When does cash settlement happen to close out short delivery?
If the exchange is able to buy the shares then the transaction won’t be cash settled. In this case, exchange would have been able to buy the shares.
For example: if 100 shares have been short delivered in total, if the exchange is able to buy only 50, then for the remaining 50 shares the settlement will be done as per the close out rate as explained in the article shared above…
Thank you for your response, please check and revert back. I asked for auction report which exchange shares with brokers. Zerodha haven’t provided that yet.
I see your account is too new may be you are new comer to this stock market. So first get right education about stock trading then start your journey. Or if you are not new and you know all these things then this problem should not accrue in the first place because i have not faced this kind of problem till now.
once dhan sent me auction bill more than uppercircuit limit with
my strong objections they revised bill lower value
i was always doubtful how to cross check auction price at exchange
for one of case after long followup i got confirmation from NSE team that auction
price sent by dhan same as in records of NSE
i stopped doubting it now but i always cross check price of auction bill
most of time dhan send auction bill of highest price of day
if u find a way to get auction trades data at nse level then let me know
