Settlement on WebNotes

Auction settlement price on Zerodha

Wed, 20 May 2026 00:00:00 +0000

The auction settlement price for a short-delivery resolution is determined by the auction session matching. Typically:

Aspect	Detail
Determination	Best price among offers + matching demand
Premium to LTP	Often 5-15%+ above day’s LTP
Time priority	Earlier offers at the same price match first
Final	Once matched, settled by exchange

Effect on short-deliverer

The seller who short-delivered pays:

The auction price (which is typically higher than what they sold at).
Plus penalty per SEBI framework.

Total cost can be 20%+ of the original trade value.

Cash-settled short delivery

Wed, 20 May 2026 00:00:00 +0000

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

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

Vs auction

Aspect	Auction-resolved	Cash-settled
Mechanism	Match in auction session	Close-out price applied
Frequency	Most common	Rare
Cost to seller	Auction premium	Close-out premium
Result	Buyer gets shares	Buyer gets cash

External references

References

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

CDSL block mechanism for pay-in

Wed, 20 May 2026 00:00:00 +0000

The CDSL block mechanism is a SEBI-approved framework that allows shares being sold to be locked in the seller’s demat account in advance of settlement, without transferring them to the broker’s pool account. The block mechanism is part of the broader direct payout to demat framework that reduces client funds and securities risk.

How the block mechanism works

Pre-block-mechanism: When you placed a sell order, the broker triggered a Delivery Instruction Slip (DIS) or used an eDIS authorisation to move shares from the seller’s demat to the broker’s pool. The broker then settled with the buyer via the pool.

CDSL TPIN regime (eDIS)

Wed, 20 May 2026 00:00:00 +0000

The CDSL TPIN (Transaction PIN) regime, also known as eDIS (electronic Delivery Instruction Slip), is the authorisation framework that allowed CDSL demat-account holders to authorise sell orders electronically using a one-time PIN, replacing the physical DIS slip system. It was the dominant authorisation mechanism for retail sell orders for several years before being progressively replaced by the CDSL block mechanism .

What TPIN is

TPIN is a 6-digit PIN issued to the demat account holder by CDSL. It serves as the holder’s electronic signature for delivery authorisation.

Direct payout to demat SEBI rule

Wed, 20 May 2026 00:00:00 +0000

The direct payout to demat rule is a 2024 SEBI framework that requires equity sale proceeds and share credits to flow directly from the clearing corporation to the client’s demat account , bypassing the broker’s intermediate pool account. The rule, effective October 2024, was introduced to reduce systemic risk and the misuse of client funds by brokers.

The rule

Before October 2024: When a client sold equity, the proceeds first credited to the broker’s pool account at the clearing corporation, then the broker transferred them to the client’s trading account, from which the client could withdraw or use for further trades. This created a temporary commingled holding of client funds at the broker.

Instant settlement T+0 stocks list

Wed, 20 May 2026 00:00:00 +0000

T+0 (instant settlement) is the same-day settlement cycle introduced by SEBI in March 2024 as a pilot, expanded subsequently to a broader universe of stocks. The eligibility list is maintained by NSE and BSE and updated periodically as the framework scales.

What T+0 means

In T+0 settlement, the buy and sell legs of an equity trade settle on the same trading day, not on T+1 as under the standard T+1 cycle .

Multiple offers at the same price in auction

Wed, 20 May 2026 00:00:00 +0000

For the detailed framework on how multiple auction offers at the same price are allocated, see Multiple offers at the same price in auction (the canonical article).

Quick summary

Time priority: earlier orders match first.
Pro-rata in specific cases.
See canonical for full details.

External references

References

NSE India, Auction allocation, nseindia.com.
SEBI, Time priority and pro-rata, sebi.gov.in.

Penalty for short delivery on Zerodha

Wed, 20 May 2026 00:00:00 +0000

The penalty for short delivery on Zerodha (and any Indian broker) consists of:

Auction price differential: Auction price - Your sell price. Typically 5-15% premium to LTP.
Exchange penalty: Per SEBI framework; small percentage of trade value.
Broker administrative fee: Some brokers (not Zerodha typically) charge additional fee.

Example cost

For a Rs 1,00,000 sell that short-delivered:

Auction price: Rs 1,12,000 (12% premium).
Differential: Rs 12,000.
Exchange penalty: ~Rs 100-500.
Total cost to seller: Rs 12,100-12,500.

That’s 12%+ of the trade value.

Settlement cycle changes 2025-26

Wed, 20 May 2026 00:00:00 +0000

The Indian equity settlement framework went through significant changes in 2025-26, building on the T+1 cycle introduction (January 2023) and the T+0 pilot (March 2024). This article summarises the changes and their effects on Zerodha clients and the broader retail market.

Recap: the move from T+2 to T+1 to T+0

Year	Cycle
Pre-2003	T+5
2003-2023	T+2
January 2023	T+1 (fully implemented)
March 2024	T+0 pilot launch (25 scrips)
2024-25	T+0 expansion phases
2025-26	T+0 broadly available; continued expansion

The direction is unambiguous: shorter settlement, less counter-party risk, faster fund cycling.

Settlement holiday impact on trades

Wed, 20 May 2026 00:00:00 +0000

When an exchange holiday falls during the T+1 settlement period, settlement is delayed to the next working day. A trade on Friday with Monday holiday settles Tuesday instead of Monday.

Example timelines

Trade day	Settlement day	Cash usable
Tuesday	Wednesday (T+1)	Thursday morning
Friday (no Monday holiday)	Monday (T+1)	Tuesday morning
Friday (Monday holiday)	Tuesday (T+2 calendar, T+1 working)	Wednesday morning

Impact

For sellers:

Proceeds available one trading day later.
Cash flow planning needs to account for holidays.

For buyers:

Short delivery and consequences

Wed, 20 May 2026 00:00:00 +0000

When you fail to deliver shares for a CNC sell (short delivery), the consequences are:

Consequence	Detail
Penalty	Per SEBI / exchange framework
Price differential	Auction price - Your sell price
Reporting	To exchange / SEBI
Repeated short delivery	Broker restrictions; account flag
Cost	Can be 20%+ of trade value

Penalty schedule

Number of short deliveries	Penalty
First	Auction differential only
Subsequent	Higher penalties; broker may restrict

Why short delivery happens

Selling shares not actually owned (mistake).
Selling pledged shares without un-pledging.
T1 confusion (selling shares not yet settled).
BTST that didn’t settle (rare).

Prevention

Verify holdings in Console > Portfolio.
Check pledge status before selling.
Don’t assume T1 = sellable.
For BTST, understand the risk.

External references

References

SEBI, Short delivery framework, sebi.gov.in.
Zerodha, Short delivery handling, support.zerodha.com.

Short delivery cash settlement on Zerodha

Wed, 20 May 2026 00:00:00 +0000

When a seller fails to deliver shares for a CNC sell (short delivery), the exchange resolves the trade via the auction market or cash settlement. On Zerodha, the seller pays a penalty plus the price differential.

Process

Seller defaults on T+1 delivery.
Exchange auctions the shares to fulfill the buyer’s obligation.
Auction price is typically higher than market (10-20% premium common).
Differential = Auction price - Original sell price.
Seller pays differential + penalty.

Cash settlement framework

For specific cases where auction doesn’t resolve:

TPIN preauthorisation on Zerodha

Wed, 20 May 2026 00:00:00 +0000

TPIN preauthorisation is a one-time consent mechanism (similar to DDPI) that allows a Zerodha client to authorise the broker in advance for sells, eliminating the per-trade T-PIN entry. Historically this was an alternative to the per-trade T-PIN + OTP eDIS flow ; now largely superseded by DDPI and the CDSL block mechanism .

What preauthorisation provided

Pre-2024: Without preauthorisation, every sell of a CDSL-held share required the user to enter T-PIN + OTP. For active traders this was significant friction.

Zerodha eDIS T-PIN OTP

Wed, 20 May 2026 00:00:00 +0000

The Zerodha eDIS T-PIN + OTP flow is the dual-factor authorisation used (historically and in residual cases) for selling CDSL-held shares without a physical DIS slip. The flow combines the holder’s CDSL T-PIN (a 6-digit transaction PIN) with a one-time password (OTP) sent to the registered mobile, providing strong authentication.

How the flow works

When you place a sell order on Zerodha Kite for CDSL-held shares (in cases where eDIS is still used):

Settlement on WebNotes

Auction settlement price on Zerodha

Effect on short-deliverer

Cash-settled short delivery

How cash settlement works

Vs auction

See also

External references

References

CDSL block mechanism for pay-in

How the block mechanism works

CDSL TPIN regime (eDIS)

What TPIN is

Direct payout to demat SEBI rule

The rule

Instant settlement T+0 stocks list

What T+0 means

Multiple offers at the same price in auction

Quick summary

See also

External references

References

Penalty for short delivery on Zerodha

Example cost

Settlement cycle changes 2025-26

Recap: the move from T+2 to T+1 to T+0

Settlement holiday impact on trades

Example timelines

Impact

Short delivery and consequences

Penalty schedule

Why short delivery happens

Prevention

See also

External references

References

Short delivery cash settlement on Zerodha

Process

Cash settlement framework

TPIN preauthorisation on Zerodha

What preauthorisation provided

Zerodha eDIS T-PIN OTP

How the flow works