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  #1  
Old 5th November 2007, 10:45 AM
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Default Short Delivery



I have recently shortsold some sbi shares. but not able to square off
my positions on the same day. Now , when should i need to settle those
scripts. What are the hidden charges - behind it ?? please
let me know.

Thanx ,
Raju
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  #2  
Old 5th November 2007, 11:45 AM
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The exchange will buy shares on your behalf from the auction market and give them to the buyer.

You will have to pay the difference between the rate at which your shorted and the rate at which the exchange has to buy the shares.

As SBI is a liquid scrip. your auction price will be 2%-5% above the current market price.

If the exchange is not able to buy shares in the auction market, it will settle the position in cash
-at the highest recorded price between the relevant trading period and the auction day; or
-at 20 per cent above the last closing price, whichever is higher.

Never ever give a short delivery. If the exchange cannot buy shares in the auction market, you may end up paying minimum 20% more than price you short sold at. SBI is a liquid scrip, so this will not happen in your case.

===================================

Besides the auction rate, you will also have to pay a small cash penalty for a short-delivery. Your broker will also be penalized. Brokers have a point system and get penalized in points. If their penalty points exceed a certain limit within a certain period, they have to pay cash penalty.

Thus brokers don't like clients who give short delivery. If you give short deliveries frequently, your broker may discontinue your account.
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  #3  
Old 5th November 2007, 12:11 PM
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Default when will this auction be done ?

let us say .. i shortsold my sbi scripts on friday. i have to settle my shares on tuesday.
when will the market going to go for auction. What if i bought shares on
monday? is there any way .. i can use my newly bought shares against
short delivery??

Thanx,
Raju.

Last edited by _hello_ : 5th November 2007 at 12:14 PM.
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  #4  
Old 5th November 2007, 12:39 PM
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Quote:
Originally Posted by _hello_ View Post
let us say .. i shortsold my sbi scripts on friday. i have to settle my shares on tuesday.
when will the market going to go for auction. What if i bought shares on
monday? is there any way .. i can use my newly bought shares against
short delivery??

Thanx,
Raju.
Pay-In and Pay-Out takes place on T+2.

Auction takes place one day after the pay-out day (T+3 day).

Auction settlement takes place on (T+5 day).

========================================

No. You cannot use newly bought shares for settling short delivery. The reason is that you will get these shares one day after the pay-out day for your short-delivery.
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  #5  
Old 14th May 2008, 08:46 AM
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Default

could you please elaborate more what short delivery means? How is it different from short selling?
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  #6  
Old 14th May 2008, 10:02 AM
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Quote:
Originally Posted by watelzbuddy View Post
could you please elaborate more what short delivery means? How is it different from short selling?
Short-selling means selling a stock that you don't own.

It may be done on intra-day basis as well as on delivery basis.

(if you do it on delivery basis, you have to borrow the stock from someone else and give delivery).

If you sell for intra-day, you have to buy back the stock on the same day and "close" your position.

If you don't buy back the stock on the same day and also don't have the stock to deliver, it is called "short delivery".
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  #7  
Old 6th June 2008, 01:13 PM
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Arrow Short Delivery

I bought 300 shares of IDEA in Delivery on 2nd june and sold it on 4th june in ATST. Now, I should have the money in my balance today (T+2). But, i didn't have that.

But, i got a mail from my broker states that.

"we would like to inform you that 300 shares of IDEA CELLULAR LIMITED have been received as short delivery. The auction payout settlement for Settlement Number ******** will be on 06-Jun-2008.

Your account will either be credited with funds or you will receive shares in your DP account. "


What it means? Can anybody explain about when i will get the money?
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  #8  
Old 6th June 2008, 03:44 PM
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Quote:
Originally Posted by zoobave View Post
I bought 300 shares of IDEA in Delivery on 2nd june and sold it on 4th june in ATST. Now, I should have the money in my balance today (T+2). But, i didn't have that.

But, i got a mail from my broker states that.

"we would like to inform you that 300 shares of IDEA CELLULAR LIMITED have been received as short delivery. The auction payout settlement for Settlement Number ******** will be on 06-Jun-2008.

Your account will either be credited with funds or you will receive shares in your DP account. "


What it means? Can anybody explain about when i will get the money?
I have moved your post to the relevant thread.

Please read the above posts in Short Delivery.

The person who sold the shares to you, didn't give delivery.

Thus, you will get shares by auction or get a cash equivalent on 6th.

However, you will also have to give a short-delivery and face an auction.

(This risk always exists in ATST. If your seller defaults, you also will be forced to default).

This was a BSE trade - right?

(Read more about settlement cycles of the exchanges).
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  #9  
Old 23rd October 2008, 03:24 PM
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Default what is the source for this piece of information?

what is the source for this piece of information?

Quote:
Never ever give a short delivery. If the exchange cannot buy shares in the auction market, you may end up paying minimum 20% more than price you short sold at. SBI is a liquid scrip, so this will not happen in your case.

===================================

Besides the auction rate, you will also have to pay a small cash penalty for a short-delivery. Your broker will also be penalized. Brokers have a point system and get penalized in points. If their penalty points exceed a certain limit within a certain period, they have to pay cash penalty.

Thus brokers don't like clients who give short delivery. If you give short deliveries frequently, your broker may discontinue your account.
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  #10  
Old 23rd October 2008, 03:48 PM
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Quote:
Originally Posted by baljit View Post
what is the source for this piece of information?
Go to NSE's site.

Download NCFM study material for Capital Markets (Dealer's Module).

From page 81 of current material:

Quote:
Penalties are charged to members for:
(a) failure to fulfil their funds obligations
(b) failure to fulfil their securities deliverable obligations
(c) Gross Exposure & Turnover Violations
(d) Margin Shortages
(e) Security Deposit Shortages
(f) Other violations in respect of client code modifications, non confirmation of custodial trades, company objections reported against the members' etc.
============================

Also see

2.5 Shortages Handling

for information about auctions and close-out procedures.
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  #11  
Old 29th March 2011, 02:39 PM
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I purchased 27 shares of UB Holdings (purchase price 181 each) and on delivery date I got a message stating as follows:

"For BSE settlement no. 201011250 there is a short delivery of 27 share/s of UB HOLDINGS. These shares may be received through Auction on or after 28-March-11. And the payout/closeout would be credited by 29-March-11."

Now, today i.e. on 29th March, I got a SMS for my linked bank account stating that "my account XXXXXXXXXXX is credited INR 5,870.88 - towards Closeout of BSE N*2........"

I think my total purchase price was INR 4,900 but they gave me 5870, why so?

Is it kind of some compensation to me for not delivery shares in my DP?
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  #12  
Old 29th March 2011, 02:57 PM
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Quote:
Originally Posted by rakeshranjan.scs View Post
I purchased 27 shares of UB Holdings (purchase price 181 each) and on delivery date I got a message stating as follows:

"For BSE settlement no. 201011250 there is a short delivery of 27 share/s of UB HOLDINGS. These shares may be received through Auction on or after 28-March-11. And the payout/closeout would be credited by 29-March-11."

Now, today i.e. on 29th March, I got a SMS for my linked bank account stating that "my account XXXXXXXXXXX is credited INR 5,870.88 - towards Closeout of BSE N*2........"

I think my total purchase price was INR 4,900 but they gave me 5870, why so?

Is it kind of some compensation to me for not delivery shares in my DP?
The shares could not be purchased in the auction.

Thus, the position was closed out on cash basis. The close-out was done 20% above the closing price on day of the auction.

Quote:
'A', 'B' and 'F' group

The close-out rate is higher of the following rates :

a) The highest rate of the scrip from the trading day to the day on which the auction is conducted for the respective settlement.
b) 20% above the closing rate as on the day of auction/close out of the respective settlement.
http://bseindia.com/about/tradnset.asp#c1
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  #13  
Old 29th March 2011, 03:05 PM
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So I gain from this transaction without owning the stock, so just wondering who bears the loss? (Stock exchange?)

Is this gain a candidate of short term capital gain?
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  #14  
Old 29th March 2011, 06:38 PM
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Quote:
Originally Posted by rakeshranjan.scs View Post
So I gain from this transaction without owning the stock, so just wondering who bears the loss? (Stock exchange?)

Is this gain a candidate of short term capital gain?
The seller who didn't deliver the shares will pay the bill.

I am not sure about the capital gain query, but my opinion is that as there was no delivery of shares it cannot be considered a "capital gain". You can show it as "other income".
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  #15  
Old 13th July 2011, 10:02 AM
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Default Short Sell - Doubt

Hi,

If short sold position is not covered when will it go to auction?

For example: If I short sold on Monday, will auction happen on Wednesday or Thursday (no trading holidays in between). Also please give me a rough idea of pricing for the following setup.

Short sell on Monday: Stock closed at 543.(upper circuit).
Tuesday's closing: 588.
Wednesdays Closing: 529, High 604.(Lower circuit hit).
Thursday's closing: 503, High 503 (lower circuit hit).
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  #16  
Old 13th July 2011, 10:16 AM
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Quote:
Originally Posted by rockford1234 View Post
Hi,

If short sold position is not covered when will it go to auction?

For example: If I short sold on Monday, will auction happen on Wednesday or Thursday (no trading holidays in between). Also please give me a rough idea of pricing for the following setup.

Short sell on Monday: Stock closed at 543.(upper circuit).
Tuesday's closing: 588.
Wednesdays Closing: 529, High 604.(Lower circuit hit).
Thursday's closing: 503, High 503 (lower circuit hit).
Who is your broker?

If a stock was sold on Monday, the auction will happen on Wednesday and settlement will happen on Thursday.

Auctions now happen on T+2 day.

Usually, the auction price is slightly higher than the market price at the time of the auction.

However, if the auction quantity is very large, the auction price can be much higher than the market price or the position may be closed out on cash basis.

Internal shortages are settled according to the policies of the respective brokers. Each broker has a different policy on internal shortages.
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  #17  
Old 13th July 2011, 10:41 AM
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Default Short Sell - Doubt

My Broker is Sharekhan

Can I presume then auction price will not be at the high price of Wednesday's trade, i.e, 604?

And when will the auction happen. After Market Hours?

If the stock is locked in Lower circuit, What are the chances the auction price to be same as the lower circuit price or even lower? .

Also if locked in lower circuit, I hope there will be some sellers in auction.

Please confirm.

Thank you.

Last edited by rockford1234 : 13th July 2011 at 11:00 AM.
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  #18  
Old 13th July 2011, 11:11 AM
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Quote:
Originally Posted by rockford1234 View Post
And when will the auction happen. After Market Hours?

If the stock is locked in Lower circuit, What are the chances the auction price to be same as the lower circuit price or even lower? .
I am not sure what the auction price will be.

The quantity will decide what the final price will be. Yesterday, 77060 shares of SKS had come up for auction. That's a big number.

There are a limited number of sellers in the auction market and thus sometimes the auction price goes much higher than the market price.

The auction happens during market hours.

On the BSE the timings are 2 PM - 2:45 PM.

Quote:
The auction for the undelivered quantities is conducted on T+2 day between 2:00 p.m. and 2.45 p.m. for all the scrips under Compulsory Rolling Settlements except those in "Z" group and scrips on "trade to trade" basis which are directly closed-out.
BSEIndia

I am not sure about NSE's timings, but they must in the same range (2 PM and 3 PM).
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  #19  
Old 13th July 2011, 11:18 AM
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Default Short Sell - Doubt

Worst case it will be 20% above today's close price right?
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  #20  
Old 13th July 2011, 11:25 AM
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Quote:
Originally Posted by rockford1234 View Post
Worst case it will be 20% above today's close price right?
Worst case, it will be higher of the two - 20% above today's close price or today's high.
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  #21  
Old 13th July 2011, 11:31 AM
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Default Short Sell - Doubt

Thanks you very much for the info. .
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  #22  
Old 13th July 2011, 02:47 PM
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There is no mention of SKS Microfinance in today's list of securities to be auctioned:

http://www.nseindia.com/content/nsccl/AUB.csv

Strange.
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  #23  
Old 14th July 2011, 09:30 AM
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But Yesterday I got a message from sharekhan than the shares have been bought at 532. But My account is in negative. In fact I made a profit of Rs 6/- per share. When I checked the ledger, it is showing" Shortage Memo for N-131/Debit. What is this actually?
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  #24  
Old 14th July 2011, 12:26 PM
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Quote:
Originally Posted by rockford1234 View Post
But Yesterday I got a message from sharekhan than the shares have been bought at 532. But My account is in negative. In fact I made a profit of Rs 6/- per share. When I checked the ledger, it is showing" Shortage Memo for N-131/Debit. What is this actually?
The settlement will be completed by tonight.

How much is the debit value per share?
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  #25  
Old 14th July 2011, 12:31 PM
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What is debit value per share?. They said there will not be any penalty. And the closing price was 529, since it was not in auction, I don't know why it was settled at 532. Any idea?
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  #26  
Old 14th July 2011, 12:47 PM
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Quote:
Originally Posted by rockford1234 View Post
What is debit value per share?. They said there will not be any penalty. And the closing price was 529, since it was not in auction, I don't know why it was settled at 532. Any idea?
Possibly, it was an internal shortage.

Sharekhan must have settled it using its own policies.

A trader who gives short delivery is not allowed to profit from the position.

See this thread:

Profit from Short Delivery?

I had shorted SKS at 591 two days back and couldn't square-off on time.

Those shares will come up for auction today. The auction rate will surely be much lower than my selling price, but Kotak Securities will debit a minimum of Rs 591 per share.

I want to know what is the debit amount per share in your case. (Total debit amount divided by the number of shares).
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  #27  
Old 14th July 2011, 12:56 PM
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The debit value is 765/- per share!!!. I got the the buy price as 532, Then why did they block 765 per share. I hope it is the buy price. Please clarify.

And I had spoken to sharekhan yesterday They clearly said if the auction price is lower than sell price, I will get the profit.

Also I read an article about investor protection fund. I couldn't understand it completely.

http://www.indianexpress.com/news/se...-norms/804978/

This was revised on 17 June 2011
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  #28  
Old 14th July 2011, 01:03 PM
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Quote:
Originally Posted by rockford1234 View Post
The debit value is 765/- per share!!!. I got the the buy price as 532, Then why did they block 765 per share. I hope it is the buy price. Please clarify.
That's "valuation debit".

It will be reversed after your auction obligations are settled.

http://www.nseindia.com/content/nscc...qshortages.htm

Kotak Securities' "valuation debit" is 1.5 times the value of shares sold short.

I guess Sharekhan uses a similar factor.
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  #29  
Old 14th July 2011, 01:10 PM
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I got it confirmed from the head office that, If auction price is lower, The profit will be credited to me. Thought the profit will mostly be offset by brokerage and other charges.

But they said Exchange will keep an eye if this happens frequently, the account will get banned!!

But in you case, you are sitting in a massive profit .
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  #30  
Old 15th July 2011, 08:25 AM
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Quote:
Originally Posted by rockford1234 View Post
I got it confirmed from the head office that, If auction price is lower, The profit will be credited to me. Thought the profit will mostly be offset by brokerage and other charges.

But in you case, you are sitting in a massive profit.
I did not make any profit.

My average selling price was Rs 589.55.

The debit was also done at Rs 589.55 per share

As per its policies, Kotak Securities must have bought these shares from the secondary market.

(I am assuming it was an internal shortage as Kotak Securities is a big broker).

The purchase price must have been much lower and yet Kotak debited my account at Rs 589.55 per share.

Also note the 150% debit and credit entries.





What Kotak Securities has done is right.

I am 100% sure that exchanges don't allow traders to profit from short deliveries.

Kotak Securities follows the same policy for internal shortages too.

If you have made a profit, it must be because the shortage was not at the exchange level.

I checked Sharekhan's policy on internal shortages. It says that for internal shortages, Sharekhan purchases the shares from the secondary market.

This is same as Kotak Securities, but Kotak Securities doesn't pass on gains to the selling trader, whereas Sharekhan does.

Quote:
In case there is an internal shortage in NSE, Sharekhan purchases the shares from the normal market and provides the shares to the buyer, on receipt of delivery. The defaulting seller would be debited with the rate at which these shares were purchased, including the brokerage, statutory charges and other incidental charges including penalty if any.
Sharekhan's policy is flawed as it allows traders to benefit from short deliveries. Such a policy increases market risk as it gives short sellers an incentive for not closing their intraday positions.

http://www.sharekhan.com/downloads/S...anPolicies.pdf

The link that you have given is about something else.

It's about cases when a broker defaults and exchanges are forced to liquidate his assets including his deposits and membership card.

Obviously, any surplus left after liquidating assets of a broker should be returned to him.

Quote:
In a circular, the regulator said that stock exchanges sought exemption from strict compliance of the earlier rules "on the ground that the residual amount remaining after satisfaction of claims against the defaulting broker should be refunded to the broker and not credited to the IPF/CPF".
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  #31  
Old 15th July 2011, 10:46 PM
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Out of context but Alchemist I feel the auctions thread should always be visible under day-trading and not get piled up by other threads.
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  #32  
Old 16th July 2011, 09:56 AM
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Out of context but Alchemist I feel the auctions thread should always be visible under day-trading and not get piled up by other threads.
You mean I should make the thread "sticky", so that it always stays at the top?
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Old 16th July 2011, 10:55 PM
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You mean I should make the thread "sticky", so that it always stays at the top?
Exactly! and so should be the detailed thread on stop-loss. Similarly we can have one good, sticky thread on capital gains under taxation as information is getting staggered.
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Old 20th July 2011, 03:09 PM
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How will things work if there is short delivery in NCDs. Will there be auction or close out?

Is there any way to find out how much quantity is short delivered on particular day on NSE/BSE?
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  #35  
Old 20th July 2011, 03:19 PM
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How will things work if there is short delivery in NCDs. Will there be auction or close out?

Is there any way to find out how much quantity is short delivered on particular day on NSE/BSE?
NCDs are auctioned too.

If the exchange is unable to buy the NCDs in the auction, the position is closed out.

A seller has to give delivery on T+2 day. Auctions are also held on T+2 day.

There is small time gap between settlement on T+2 day and the auction.

The notification of auction is placed on NSE's site, but usually that happens just before the auction begins.

You can find the auction notification here:

http://www.nseindia.com/content/nsccl/nsccl_notices.htm

See "List of securities for auction".
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Old 20th July 2011, 03:37 PM
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Originally Posted by Alchemist View Post
NCDs are auctioned too.


You can find the auction notification here:

http://www.nseindia.com/content/nsccl/nsccl_notices.htm

See "List of securities for auction".
Thanks Alchemist. Can I find similar details for BSE?
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  #37  
Old 20th July 2011, 07:34 PM
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Thanks Alchemist. Can I find similar details for BSE?
Yes.

Search for "Demat auction".

Download the attachment.

BSE - Notices
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  #38  
Old 20th July 2011, 08:51 PM
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How will things work if there is short delivery in NCDs?
Edelweiss clearly specifies that the orders for NCDs will be placed under product type 'Delivery' by default. So no case of any intraday without sufficient holdings. Wonder what's the case with other brokers.
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Old 20th July 2011, 09:58 PM
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Edelweiss clearly specifies that the orders for NCDs will be placed under product type 'Delivery' by default. So no case of any intraday without sufficient holdings. Wonder what's the case with other brokers.
Some brokers do allow shorting NCDs.

It's not possible to buy or sell NCDs via Kotak Securities' online platform.

It's possible to short NCDs from NSE terminals, so maybe if I call Kotak's call center, they will allow me to short NCDs.
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Old 10th August 2011, 05:22 PM
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I sold page ind 60 shares @ 2332 on 10th Aug, 2011. I want to know, how much I could need pay or they going to debit my account? Please any one help in this. Even though approximate.
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