Shares sold on ex buyback date

[aniln]

If sold on EX DIVIDEND DATE the dividend will go to brokers account and broker will reimburse the same in trading account . WHAT ABOUT BUYBACK IN SAME SITUATION ? for example NTPC if sold on 12 November or even on 13 November ( these are ex buyback dates) the investor is eligible for buyback offer but it will go to broker . (1) HOW BROKER WILL RETURN THE OFFER TO CLIENT (2) SINCE IT IS NON TRANSFERABLE , will broker apply on behalf of client ? (2) if YES than since broker get for so many of his clients , the RESERVED category will become GENERAL ?
@ShubhS9 @si

[ShubhS9]

You will not be eligible to participate in Buyback if you have sold your shares on ex-date.

[aniln]

Thanks …but isn’t it possible that the shares will be delivered to clearing house as per T PLUS 2 in such cases so that the investor do not lose on benefit of buyback …of course taking care of cash margin requirement if any ?

[ShubhS9]

@aniln

but isn’t it possible that the shares will be delivered to clearing house as per T PLUS 2 in such cases so that the investor do not lose on benefit of buyback …of course taking care of cash margin requirement if any ?

In this case, The stockbroker will have to collect cash margin to allow sale without EPI. This means maintaining two parallel systems of delivery everyday which can cause disruptions. The simplest way to make sure you can participate in a buyback is to sell after the record date.

[aniln]

@ShubhS9

In this case, The stockbroker will have to collect cash margin to allow sale without EPI.

WHAT IS EPI ? please guide.

[ShubhS9]

@aniln

WHAT IS EPI ? please guide

EPI refers to Early Pay-in, can read this post for detailed explanation:

What is early pay-in transactions ? how traders can be benefitted from it?

Early pay-in is when you fulfill your settlement obligation (funds or securities) to the Exchange earlier than the designated due date for the particular settlement. The benefits are that you get lesser margins levied for the trades you take on Exchange. For example: In the SLB (Stock Lending & Borrowing market), the settlement is done on T+1, i.e if you are the lender of a stock, a margin of 25% of the value of the securities lent gets blocked. The stocks lent will have to be delivered to the …

[aniln]

"BIG LACUNA WITH ZERODHA when you sale shares on EX BUYBACK DATE "
My uncle who deals with BHH SECURTIES PVT LTD at Mumbai who are Members of BSE , NSE ( Cash & F&O ), United Stock Exchange of India ( Currency Futures ) and are a Depository Participant with CDSL *****. On inquiry it was told to him that if there is adequate cash margin available , you can very well sell TCS today on 27 November . the broker will debit his shares only after record date means on or after 01 December. THUS investor WILL GET BUYBACK OFFER .
@nithin @ShubhS9 @siva-reddy

[ShubhS9]

Why we do EPI has been explained here:

SEBI mandated the collection of upfront margins in the Equity segment from the 1st of September 2020, this meant that if someone did not bring in adequate margins, a penalty would be levied. While this didn’t have an impact on purchase trades (since we would ask for 100% of the purchase value upfront), we did have to change the way we settle sell trades. We had two options:

(a) Ask the client to bring in money if they wanted to sell stock (20% of the value)
(b) Debit stocks the day that the sale was made and do an Early Payin (EPI) to the Exchange, which gave two benefits:

 (i) the need for upfront margin wasn't required (as stated in point a above)
 (ii) the credit from sale could be allowed to carry out other trades

We opted for (b) and this is the reason it’s imperative that we debit the stock on the same day.

And as explained above to your earlier query regarding blocking the margin and debiting shares later.

@ShubhS9

In this case, The stockbroker will have to collect cash margin to allow sale without EPI. This means maintaining two parallel systems of delivery everyday which can cause disruptions. The simplest way to make sure you can participate in a buyback is to sell after the record date.

[aniln]

Thanks for this kind reply and perfect from investors view . just a queries query … you mean to say brokers like BHH securities etc are running 2 parallel pay in process…EPI for those without margin and RPI for with margin !

[aniln]

@suman0105