Short delivery, who will get penalised?

General
1

Suppose A short sell in intraday to B, B sell to C, C sell to D. D now go for delivery. For some reason A could not square off his position(no sellers or market hit circuit etc.). So who all will get penalised for short delivery, is it A who didn’t square off his position or is it C, who is person who has to give the stock to D. will B also get penalised because he is also part of the chain ?

2

Below is what will happen in the above mentioned scenario

  • Client A: There will be an auction posted on his account since he short sold and did not deliver.

  • Client B: There will be no obligation as its an intraday trade for B where he’s bought & sold.

  • Client C: There will be no obligation as its an intraday trade for C where he’s bought & sold.

  • Client D: He will either receive shares from Auction market or will receive credit of funds from Exchange.

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3

thank you for clearing this

4

Now in the above scenario, what will happen if D sell the shares to E in T1 day?

5

Since Client A has short sold and did not deliver shares on time to Client D, Client D selling on T1 Day, too won’t be able to deliver them on time to Client E and in this case there will be auction posted on Client D’s account as well.

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6

@ShubhS9 Thanks man for sharing such a good knowledge.