Zerodha Cash settlement Short delivery

Cash-settled short delivery

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In some cases, a short delivery is resolved via cash settlement rather than auction. This typically happens when:

  • The auction fails to match.
  • The scrip is in a specific surveillance state.
  • SEBI-mandated cash settlement for certain conditions.

How cash settlement works

  1. Exchange determines a “close-out price” (typically a percentage above market).
  2. Short-deliverer pays the close-out price minus original sell.
  3. Buyer receives cash equivalent.
  4. No physical delivery; trade settled in INR.

Vs auction

AspectAuction-resolvedCash-settled
MechanismMatch in auction sessionClose-out price applied
FrequencyMost commonRare
Cost to sellerAuction premiumClose-out premium
ResultBuyer gets sharesBuyer gets cash

See also

External references

References

  1. SEBI, Cash settlement framework, sebi.gov.in.
  2. NSE India, Close-out pricing, nseindia.com.

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