Shortage Handling
Security Shortage
Failure by seller to deliver securities shall result in buy-in auction for the securities by Clearing Corporation as per auction schedule declared periodically.
The valuation price shall be recovered for securities which were not delivered by clearing member and the same shall be 103% of settlement price of such securities, on the immediate trading day preceding the pay-in day for the securities unless prescribed otherwise from time to time by the relevant authority. The settlement price shall be close price provided by Exchange or as decided by the relevant authority of the Clearing Corporation from time to time.
The auction amount shall be charged as per auction rate to the short delivering member. Auction rate shall be computed on lines of capital market segment. Failure to procure shares in auction shall be closed out.
Fund Shortage
a. In case of a settlement shortage of Rs. 5 lakhs or more, the trading facility of the member shall be withdrawn immediately, and securities pay out shall be withheld.
b. If in the last three months, the member is short over Rs. 2 lakhs on six or more than six occasions, the trading facility of the member shall be withdrawn and securities pay out shall be withheld
In case, the member is disabled on account of (b) above, on making good the shortage amount, the member shall be permitted to trade subject to its providing a deposit equivalent to its cumulative funds shortage as the 'funds shortage collateral'. Such deposit shall be kept with the Clearing Corporation for a period of ten settlements and shall be released only if no further funds shortages are reported for the member in next ten consecutive settlements. Members may further note that there shall not be any margin benefit or any interest payment on the amount so deposited as 'funds shortage collateral'. The amount may be provided by way of cash, fixed deposit receipts, or bank guarantee, equivalent to the cumulative funds shortage.
Close-out
The close out Price shall be the highest price recorded in that EGR on the Stock Exchange from the date of trading and up to the date of auction/close out
OR
3% above the latest available closing price at the exchange on the day on which auction offers are called for
WHICHEVER IS HIGHER
The proceeds from Auction/ Close-out shall be used to settle the claim of the aggrieved party. Any amount remaining thereof shall be credited to the Core Settlement Guarantee Fund instead of crediting it to the defaulting party’s account
Members shall be required to voluntarily bring to the notice of Clearing Corporation, where an auction profit is being identified by the members at the client level.