Short on equity

General
1

1) How does auto-square off works in case of short-delivery ,Is the auto-trigger defined only for equity short on MIS  or NRML also ?

Hope it will not consider to auto-square off for the equity sold on CNC ?

2) Incase of sell and buy on equity using CNC option that is already in the demat, it is considering them as intraday action.

2

There are 3 types of order, for which auto square off will happen around 3:20 pm in the evening. All these three are intraday type trades.

  • MIS - Margin Intraday Square-off
  • CO - Cover Orders
  • BO - Bracket Orders

There are two types of order, for which your positions can be kept overnight and carried over to next day and so on.

  • NRML - Normal
  • CNC - Cash and Carry

There are two cases in which auto square off can happen

  • You are doing a Intraday traded (any one of 3 types above) and you have not square off your deal yourself for the whole day. So when trading ends for the day, automatic square off will happen at 3:20 pm.
  • Your margin in the account becomes insufficient to cover your positions in F&O or commodity markets, due to which Risk Management Team will decide to square off your positions to avoid further loss. In case of options, if margin in your account goes below Span Margin, your position will be squared off.

Equity shares bought under CNC is not squared off and you can keep it as long as you want, since you have already paid full money for those shares.


When you sell or buy using CNC option it is considered as Holdings/Delivery trade. It will not be considered as Intraday. But if you (buy and sell) or (sell and buy) equity shares on the same day without keeping them in demat account, then it is considered as Intraday trade. Only when you keep it overnight it is considered as CNC.

You can also sell a stock in MIS and buy it back before 3:20 pm, without actually having the stock initially with you. This is called short selling.

For shares which you already have it in your demat account as holdings, you can sell them anytime, as you wish. If you sell the shares from demat account and later buy the shares of the same stock under CNC, you will get those shares to your demat account in T+2 days, 2 days time.

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3

Those shares bought in CNC will not be auto squared off. Auto square off will be only for those shares bought as MIS.

In case you have some shares in your demat account and if you sell and buy ( or buy and sell) using CNC option same day itself, then your shares in demat is not effected. These transactions, although done using CNC, will be considered as pure intraday as it is squared off same day itself.

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4

Auto-square-off on short-sell is not with all brokers i think, is this one of the speciality with Zerodha ?

5

I think almost all brokers square off on short sell intraday trades, Can you be specific about any broker who doesn’t have this facility?
Since the broker is allowing you to short-sell without you not having the shares, he have to square off by buying them back. No other go. Some brokers allow carrying on short selling to next day, I think on T+5 basis or so.