InvestorQ : How is the security delivery shortages treated in the Retail Debt Segment?
Arya Nanda made post

How is the security delivery shortages treated in the Retail Debt Segment?

Answer
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Dawn Cherian answered.
1 year ago


In the event of failure/shortage in delivery of securities, the Exchange would close-out such shortages at the ZCYC valuation for prices plus a 5% penalty factor which would be debited to the account of the member who has failed to deliver the securities against his sale obligation. The buyer in the event of non-delivery of securities by the seller would be eligible to receive the compensation/consideration which would be computed at the higher of either the highest trade price from the trade date to the date of close out or closing price of the security in the normal market on the close-out date plus interest calculated at the rate of overnight FIMMDA-NSE MIBOR for the close-out date. The difference between the amount debited to the seller and amount payable to the buyer on the basis discussed above would be credited to the Investor Protection Fund of the Exchange.

The Exchange has also set up a separate Trade Guarantee Fund (Settlement Guarantee Fund) for the Retail Trading in G-Secs as was mandated by SEBI through its circular.