Notice of short delivery

#1

Today I have received a short delivery notice. It says either arrange for quantity in demat or funds in ledger.
Can someone explain in detail please as in spite of reading the link mentioned its difficult to understand fully.
Thanks

#2

image

Is this the email you’ve received? If yes, I’ve explained it below:

The settlement cycle for Equities in India is T+2. That means when you buy stock on ‘T’ day, you’ll receive the stocks to your demat account on T+2 day. However, there are times when you buy stock on ‘T’ day but don’t receive delivery on T+2. This could happen when the seller of the stock you’ve bought it from doesn’t deliver the stock because of which you don’t receive it.

In such a case, the Exchange conducts an auction and tries to buy these stocks in the auction market and deliver them to the buyer. In the event that the Exchange is able to buy, it’ll deliver such stock to the broker on T+3 and you’ll receive delivery from broker on T+3. In the unlikely event that the stock isn’t available in the auction market, then you’ll get credit of funds to your ledger as against receiving stocks.

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#3

@mns2611 It means you have sold the shares but the same are not there in demat account thus you have short sold . now you must arrange shares so that your broker can deliver to buying broker as per t plus 2.
If you can not arrange shares , you must arrange some funds for which you are likely to suffer loss due to auction or squared off .
date of your sale and name of company is not provided by you so limited answer is being given. if it is T /Z group share , you may suffer big loss .

#4

How much credit does one gets , is it equal to his purchase price of more then it

#5

When the Exchange isn’t able to arrange for stocks in the auction market and instead resorts to paying cash instead, it’s referred to as a ‘Close out’. Close out will be at the highest price prevailing in the Exchange from the day of trading till the auction day or 20% above the official closing price on the auction day, whichever is higher.

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#6

Thanks v much Venu Madhav.
But why is it mentioned that either I should arrange the shares credit in my demat or put funds in my ledger?

#7

Would help if you could attach a screenshot of the email you’ve received. You can hide all the account sensitive information and upload the image.

#8

That means buyer of stock which has not been delivered to his demat will not suffer any loss because of short delivery by the seller.

#9

Here is the screenshot attd.

#11

If purchase is mentioned then why the second sentence

#12

Thanks

#13

You’re correct. In all likeliness, he stands to gain out of the resulting non delivery of stocks.

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#14

It is very clear from the screen short you posted that NOW either your purchased shares will be credited to demat through auction or if not possible instead of shares money will be credited to your ledger.
since it was Tata motors , the short received shares will be attempted to buy through auction and if not received in auction too than close out credit will be given .
In T and Z group there is no auction but compulsory close out .

#15

The second sentence means that if you don’t receive credit of stocks to your demat account, funds will be credited to your ledger. This email is not asking you to maintain funds in your ledger.

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#16

Thank you so much

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#17

Thanks sabkaview

#18

Thanks for input, Prakhar

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#19

Bhai Oscar award mila hai kya?

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#20

Omg this can happen in Tata motors too!! I thought short delivery can happen only in illiquid stocks…

#21

happens most of time with low lvl brokers, when they missed to close their clients intraday position this happens. Reason why we should have trading acc with top 3 broker rather than cheap high leverage brokers.

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