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 ?
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.
thank you for clearing this
Now in the above scenario, what will happen if D sell the shares to E in T1 day?
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.
@ShubhS9 Thanks man for sharing such a good knowledge.