I’m a buyer.
Case 1. I bought shares from seller X and sold them the next day. The seller X defaulted on his delivery. So he has to pay penalty first. Later when I sold shares the next day, on T+2 day since I didn’t have shares on my Demat account, I had to pay the penalty too.
Case 2: I bought shares intraday using the MIS option from seller Y. Seller Y defaults on his delivery. Later I squared off the position the same day. Would I’ve to pay the penalty here since I sold shares I didn’t have?
In MIS (Intraday) as you’re squaring-off your position on same day, there is no risk of short delivery.
Only chance of short delivery while using MIS is when you short a stock and it hits upper circuit, as you will not be able to square-off your position. You can learn more on this here.
In MIS (Intraday) as you’re squaring-off your position on same day
If I was a buyer initially, squaring off means selling it right? So if during the initial buying, the seller who sold the shares to me failed to provide me with the shares, then how can I square (sell) it off? Or is there something that I misunderstood here?
When you are doing intraday trading (buying - selling and vise-versa on same day), you are not taking or giving delivery of the shares. The obligation to take or deliver shares arises only when you carry forward your position.
When you are doing intraday trading (buying - selling and vise-versa on same day), you are not taking or giving delivery of the shares.
So how’s the clearing and settlement process goes for intraday? If I’m selling the stocks intraday and the buyer is taking delivery, how does the clearing and settlement work?
bro… if anyone is buying or selling shares it doesn’t immediately become delivery trade… it’ll be considered delivery trade only after market closes and buyer or seller hasn’t squared off their position… because before market close one can close their position any time… if we start going deep into chain of events then it will be very complex to understand and shares will be trading hands 100s of times throughout the, i think simple conclusion and thing to keep in mind is, once we square-off our intraday position we have no obligation to fulfill of giving delivery of shares or taking delivery of shares…