Short delivered of Stock

PS: Please note that I only do delivery based trading.

I have received a notice from Zerodha, saying that my order for Stock A is short delivered.

Appreciate if some expert can help me to understand what does short delivery mean for a buyer.

Will I be getting the shared delivered at the settlement date or my fund back to my trading account?

If its the fund, will I get the original amount or the current amount as per the price of Stock A?

Thanks
Naveen

Mr. Naveen,

‘Short delivery’, means less quantity will be delivered than what has been ordered. Rest of the matter is between the client and the broker, whether you wish to insist on taking delivery or not.

Check this blogpost, explains in detail.

Thanks Nitin.

Blog post did explain the process clearly.

I guess, I will have to wait for couple of days to see how this played out.

Cheers
Naveen

thanks for clarification

I have experienced short delivery many times. I have traded with other brokers and has never happened. Wonder why it happens only with Zerodha.

The usual practice is that the seller’s broker is under a firm obligation to deliver. If the short delivery happens then the buyer’s broker has to be keen on protecting client’s interest and demand an auction of the shares at the time of settlement. Zerodha is more of a technology provider rather than a broker in true sense.
When such problems arise the founder will be narrating his favourite story what difficulties he had faced when trading stocks as a novice. But the basic fact is forgotten that they are now not novice investors but professional brokers who must be enthusiastic to protect the client’s interest rather than being friendly with their own tribe.

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Dear @abbanerjee,

Well, this is the first time I am seeing this no can’t comment much until this plays out.

Thanks
Naveen

Just to be clear, I always got the stocks at the price I bought after being short delivered within the settlement date. So no actual issues, just an observation.

The buyer is always protected in case of short delivery. Its the broker of the seller who is on the hook. The main issue is that since it happened so many times with Zerodha, I cannot understand why as all these trades are on exchange.

Hello @nithin

Still no share quantity or fund in my account.

Raised support ticket as well but so far no resolution.

What the backend processing timelines for each day?

Appreciate if you can help.

Thanks
Naveen

@naveengarg,

If you bought shares on T day from a seller who short delivered the shares sold to you, then these shares will be purchased by the exchange from the auction market on behalf of the seller and settled into your Demat account on T+3 day EOD. The settlement will happen either in the form of shares or cash(if there are no sellers in the auction market).

Hello @BharatW,

I get the process. The T3 is supposed be today (18th).

So far I have not seen shares or fund in my zerodha account.

When you say EOD, what does this mean, is it End of Market timing or a cut off timings (lets say 6:00 PM IST).

Thanks
Naveen

Here, EOD refers to whenever the trade processes are complete for the day. Could you please provide me with your support ticket number? We’ll have it checked and I’ll respond to you on the ticket itself.

Thanks @BharatW,

This is now resolved. Apparently, the EOD in this case next day :slight_smile:

Little bit disappointed on the overall process.

Regards
Naveen

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@Bhagyaraja, you purchased shares at bse or nse as T plus 2 settlement means the purchased share must be delivered to your demat by evening of third working day (including date of purchase) and if it is short delivered by selling broker ,will come by 4th working day through auction for all normal group .
IF the purchased shares are T and Z group shares and selling broker delivered short ,there is no auction process so as to buy shares but short selling broker will credit the buying broker with purchased amount plus a huge square off charges on 4th working day which can be as high as 20 % higher than traded price of 4 th working day(square off day ).
SAME thing will happen in normal group shares too if in a RAREST of rare case even in auction the shares are not available ,than short selling broker will have to pay cash as above through square off of trade.

@naveengarg : like you i am also only and only delivery based trader . do not have F&O account and last traded intra day was sometimes 3 year back.since Zerodha and few other brokers do not charge brokerage on delivery based trade and even the demat charges are bit low ( nsdl e speed charges rs 15 plus tax from may 2018) what is their income from client like us ?

We contribute peanuts to Zerodha revenue. Not sure how much delivery base % they earn, but I believe it will be very small.

However their main revenue comes from intraday traders which constitute main client base.

Hi, thanks for the information. I bought ifbagro stock at nse. 50 shares. Short delivered quantity is 45. Now can you please tell me how it works this type stock.
Thanks

You dont have to worry about it. The person who sold it to you wasn’t able to deliver on the obligation. Hence the seller’s broker will buy it from the auction market and deliver to your account by Trade + 3 days.
This blogpost has everything explained

@Bhagyaraja : the position stated by @Umar is right since it is a normal group share. in rarest of rare case if the shares are not available to selling broker in auction, the transaction will be squared off and you will get cash credit as mentioned by me in my previous post.