Big Mistake - Didn't cover short. Please help.
- Thread starter ralph2324
- Start date
Hi,
Thanks for the reply ravinder, I spoke to my RM from Angel.
He said he's trying and will see what he can do..
But he can only do that tomorrow morning.
He was talking about some 7% penalty.. I wanted to understand 7% of what?
I'm terrified and feel this is the biggest blunder I could have done.:annoyed:
btw I shorted in nse. Can any one tell me about there experience under similar circumstances.
I'll update in the coming days so that others are careful.
I'm never going to short beyond 2:30 ever.
Thanks for the reply ravinder, I spoke to my RM from Angel.
He said he's trying and will see what he can do..
But he can only do that tomorrow morning.
He was talking about some 7% penalty.. I wanted to understand 7% of what?
I'm terrified and feel this is the biggest blunder I could have done.:annoyed:
btw I shorted in nse. Can any one tell me about there experience under similar circumstances.
I'll update in the coming days so that others are careful.
I'm never going to short beyond 2:30 ever.
shorted one will be bought back in auction trading
What is an auction?
The exchange can initiate an auction in case the selling trading member is unable to deliver the shares, for various reasons such as short delivery, bad delivery and objections. The exchange purchases the requisite quantity in the auction market and gives the delivery to the buying trading member. This process takes three to five days to complete and thus in case if you have a purchase position and the shares are not delivered by the opposite selling member, then there could be a delay in receiving the shares, until such time that the exchange completes the auction process.
Note:
Internal shortage: in internal shortage the broker repurchases securities from the exchange at market rate and the shares are transferred to the client's account. This cycle is completed in T+3 days.
Exchange shortage: here there is a shortage in the exchange for which the client gets credit and the account is settled by the exchange. This cycle is completed in T+ 5 days.
What happens if no one offers shares in the auction market?
In case there is no offer for shares in the auction market, then as per the rules of the NSE the sell trade is squared off at the highest price for the scrip in the relevant settlement or at 20% above the last available trading price on the NSE, whichever is higher.
What is an auction?
The exchange can initiate an auction in case the selling trading member is unable to deliver the shares, for various reasons such as short delivery, bad delivery and objections. The exchange purchases the requisite quantity in the auction market and gives the delivery to the buying trading member. This process takes three to five days to complete and thus in case if you have a purchase position and the shares are not delivered by the opposite selling member, then there could be a delay in receiving the shares, until such time that the exchange completes the auction process.
Note:
Internal shortage: in internal shortage the broker repurchases securities from the exchange at market rate and the shares are transferred to the client's account. This cycle is completed in T+3 days.
Exchange shortage: here there is a shortage in the exchange for which the client gets credit and the account is settled by the exchange. This cycle is completed in T+ 5 days.
What happens if no one offers shares in the auction market?
In case there is no offer for shares in the auction market, then as per the rules of the NSE the sell trade is squared off at the highest price for the scrip in the relevant settlement or at 20% above the last available trading price on the NSE, whichever is higher.
Since you have already received enough on the consequences of Short Selling....
Next time after the market closes....check your position and if their is something that you haven't covered....you still have chance to cover it in 'Post Closing' Session
Which is open for 10 minutes at different timings for BSE & NSE, don't know the exact time for each of them....I think one of them opens at 3.45 pm and the other opens at 4.00 pm anyways crosscheck with your broker....
Another thing Post Closing session orders can only be carried out by your broker or sub-broker....so you will need to inform them what to cover.
Happy & Safer Trading
SavantGarde
Next time after the market closes....check your position and if their is something that you haven't covered....you still have chance to cover it in 'Post Closing' Session
Which is open for 10 minutes at different timings for BSE & NSE, don't know the exact time for each of them....I think one of them opens at 3.45 pm and the other opens at 4.00 pm anyways crosscheck with your broker....
Another thing Post Closing session orders can only be carried out by your broker or sub-broker....so you will need to inform them what to cover.
Happy & Safer Trading
SavantGarde
hi Ralph
when ur delivery goes short, the exchange would buy the shares in auction the next day. the penalty is not huge. majorly u will have to pay the difference between the price that u sold at and the price @ which the exchange is able to procure the shares in auction.(in case the exchange is not able to procure the shares even in auction, the exchange would give a cutting rate of 20% above the close to the counterparty, which u will have to bear, though the good part here is that satyam being a highly liquid counter, there will be no problem for the exchange to procure the shares in auction and I belive the auction rate would not be much higher than the prevailing mkt. rate @ the time of auction)
if u are working with a good broker, I think arranging for 1000 shares of satyam should not be a problem for them, it depends on how good ur relations are with him.in case the broker is able to procure the shares, all u have to do is to repurchse the shares tomorrow morn. and give him the delivery back. this would be the best case scenario.
if the broker cannot arrange the shares, it becomes a little tricky.
there are two things that u can do.
1. if ur view on satyam is bullish, buy back the shares 2morrow morn., hold them till the time of ur auction and sell them in the market right @ time of auction. this way if satyam goes up, u will have to pay the difference of todays sale and tommorrws purchase and whatever difference there is bet. the mkt. price and auction price of satyam, but u will be insulated from any upward movement in the stock.
2. if ur view is bearish, just leave the trade as it is. if the auction price is less than ur sale price,the exchnge would not credit u anything (the proceeds supposedly go to the investor protection fund), but u will escape with just a small penalty.
hope this helps
regards
when ur delivery goes short, the exchange would buy the shares in auction the next day. the penalty is not huge. majorly u will have to pay the difference between the price that u sold at and the price @ which the exchange is able to procure the shares in auction.(in case the exchange is not able to procure the shares even in auction, the exchange would give a cutting rate of 20% above the close to the counterparty, which u will have to bear, though the good part here is that satyam being a highly liquid counter, there will be no problem for the exchange to procure the shares in auction and I belive the auction rate would not be much higher than the prevailing mkt. rate @ the time of auction)
if u are working with a good broker, I think arranging for 1000 shares of satyam should not be a problem for them, it depends on how good ur relations are with him.in case the broker is able to procure the shares, all u have to do is to repurchse the shares tomorrow morn. and give him the delivery back. this would be the best case scenario.
if the broker cannot arrange the shares, it becomes a little tricky.
there are two things that u can do.
1. if ur view on satyam is bullish, buy back the shares 2morrow morn., hold them till the time of ur auction and sell them in the market right @ time of auction. this way if satyam goes up, u will have to pay the difference of todays sale and tommorrws purchase and whatever difference there is bet. the mkt. price and auction price of satyam, but u will be insulated from any upward movement in the stock.
2. if ur view is bearish, just leave the trade as it is. if the auction price is less than ur sale price,the exchnge would not credit u anything (the proceeds supposedly go to the investor protection fund), but u will escape with just a small penalty.
hope this helps
regards
Last edited:
I shorted 500 PERSISTENT shares Yesterday and forgot to cover
I have received this mail today:
Sub : Delivery Shortage in your account for Settlement BWXXXXX (BSE Rolling Mkt. Lot)
With respect to the following sales made by you in Settlement No : BWXXXXXX (BSE Rolling Mkt. Lot)
Scrip Code ISIN Scrip Name Settlement Short Delivery
--------------------------------------------------------------------------------------------------------
XXXXX INEXXXXXXX PERSISTENT BWXXXXXX 500
Please note that we have not yet received the above mentioned deliveries in our Pool Account to meet the Exchange obligation. In case you have already effected delivery of the same, kindly email us the DP Id, Client Id and execution date and ignore this mail.
For your ready reference our Pool Account details are :-
CMBPID : INXXXXXX CM Name : XXXX
Pay in for Settlement No BWXXXXXX is on 29/10/2010, before 10:30 a.m. The shares should reach our Pool Account at least 2 hours before the PAY-IN.
Is there anything I can do? Please help :'(
I have received this mail today:
Sub : Delivery Shortage in your account for Settlement BWXXXXX (BSE Rolling Mkt. Lot)
With respect to the following sales made by you in Settlement No : BWXXXXXX (BSE Rolling Mkt. Lot)
Scrip Code ISIN Scrip Name Settlement Short Delivery
--------------------------------------------------------------------------------------------------------
XXXXX INEXXXXXXX PERSISTENT BWXXXXXX 500
Please note that we have not yet received the above mentioned deliveries in our Pool Account to meet the Exchange obligation. In case you have already effected delivery of the same, kindly email us the DP Id, Client Id and execution date and ignore this mail.
For your ready reference our Pool Account details are :-
CMBPID : INXXXXXX CM Name : XXXX
Pay in for Settlement No BWXXXXXX is on 29/10/2010, before 10:30 a.m. The shares should reach our Pool Account at least 2 hours before the PAY-IN.
Is there anything I can do?
Please help :'(Similar threads
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