How-to auto square-off MIS intraday RMS short delivery auction penalty

How to fix an intraday position not auto-squared-off

From WebNotes, a public knowledge base. Last updated 21 June 2026. Reading time ~11 min. Level: Intermediate.

Key facts

Why it usually happens	Illiquidity, the scrip locked at a circuit, an oversized order above the 30,000-quantity per-order auto-square-off cap, or an exchange or RMS delay
What happens to the position	An MIS, BO or CO trade not squared off the same day converts to a Cash and Carry (CNC) delivery or NRML carry-forward position overnight
Who carries the risk	The onus of squaring off intraday positions lies with the client; the auto-square-off is a safety net, not a guarantee (Zerodha policy)
Auto-square-off charge	Rs 50 plus 18 per cent GST per order squared off by the Zerodha RMS team
First action	Square off manually before the cut-off (around 3:20 pm for equity MIS); you cannot place fresh MIS or CO orders after the square-off time

Procedure

Confirm the position is still open in the Positions tabOpen the Positions tab on Kite after the cut-off window. A position still showing quantity, with its product now reading CNC or NRML instead of MIS, was not squared off and has converted to delivery or carry-forward.
Identify why it did not square offCheck the scrip for a circuit lock, thin liquidity, or an order quantity above 30,000 per order. The auto-square-off uses market orders and caps each order at 30,000 quantity, so oversized or illiquid positions can be left partly or wholly open.
Square off manually at once if the market is openIf you are inside market hours and the scrip is trading, exit the position yourself from the Positions tab rather than waiting for the next RMS sweep. Fresh MIS or CO orders are blocked after the cut-off, so exit using CNC or NRML as the product now standing on the position.
If a long converted to delivery, fund it or sellA buy position that became delivery needs full cash. Add the required funds to hold it, or sell it the next session. If you neither fund nor sell, the Zerodha RMS desk will square it off the next trading day without a margin call.
If a short converted to delivery, cover the short deliveryA sell position you could not buy back leaves you short. The exchange auctions the shares to deliver to the buyer on T plus two settlement; you bear the auction penalty. Buy the shares the same evening or next morning to avoid going to auction where possible.
Account for the charge and the overnight riskAn RMS-driven square-off costs Rs 50 plus GST per order. A carried-forward position also carries gap risk to the next open and a possible margin shortfall penalty if you lack the margin to hold it overnight.

An intraday position on Zerodha that is not auto-squared-off by the cut-off does not vanish; it converts the same evening into a delivery position under CNC or, in derivatives, a carry-forward NRML position. The square-off you rely on is a risk-management safety net the broker runs around 3:20 pm for equity MIS , not a guarantee, and Zerodha’s own policy states the onus of closing intraday positions stays with the client. When the net does not catch a position, the cause is almost always one of a small set: the scrip was illiquid or locked at a circuit , the order ran above the per-order quantity cap, or an exchange or RMS delay intervened.

This guide explains how to tell that a position slipped through, why it did, and exactly what to do next, which differs for a long that became delivery against a short that left you short-delivered. It also sets out the costs: the Rs 50 plus GST per-order square-off charge, the overnight gap risk, and the auction penalty a short delivery triggers on T plus two settlement. For the segment-wise cut-off schedule itself, the companion reference is intraday auto square-off timings (MIS) .

Conflict-of-interest disclosure. This guide is published by the WebNotes Editorial Team for informational purposes and is written independently. WebNotes operates a Zerodha account-opening referral programme, disclosed on the pages that carry the referral link; this guide does not carry it and earns no referral commission from the procedure described here.

Step-by-step procedure

The numbered box above gives the sequence. The detail below covers the parts that decide your loss: why the net missed the position, and the split between fixing a converted long and covering a short delivery.

1. Confirm the position is still open in the Positions tab

After the square-off window, open the Positions tab on Kite. A position that was squared off disappears into closed P&L. A position that was missed still shows an open quantity, and its product label reads CNC or NRML rather than MIS. That label change is the tell: the trade has already converted to delivery or carry-forward, and you are now holding overnight risk you did not plan for.

2. Identify why it did not square off

The auto-square-off places market orders to flatten positions, and Zerodha caps each such order at 30,000 quantity to avoid moving thin instruments. Three causes account for most misses. First, illiquidity: on a low-volume scrip there may be no counter-orders to fill a market exit. Second, a circuit lock, where the scrip is frozen at its upper or lower circuit and only one side of the book exists, so a square-off cannot transact. Third, an oversized order above the per-order cap, which leaves a remainder open. Exchange or RMS-side delays are a fourth, rarer cause.

3. Square off manually at once if the market is open

If you catch the open position while the scrip is still trading, exit it yourself instead of waiting for the next RMS sweep. Because fresh MIS and CO orders are blocked after the cut-off, you place the exit using the product the position now carries, CNC for a converted equity trade or NRML for a derivatives leg. Acting yourself avoids the Rs 50 plus GST RMS charge and lets you choose a limit order rather than accept a market fill at a poor price. See how to quick exit holdings and positions for the fastest exit route.

4. If a long converted to delivery, fund it or sell

A buy MIS that could not be sold, for example because the stock locked at lower circuit, converts to a delivery holding and needs full cash. You have two clean options. Add the required funds to your account to hold the stock as a genuine delivery position. Or sell it in the next session if you do not want to hold it. If you do neither, Zerodha’s RMS desk will sell the stock the next trading day to recover the funds, without sending a separate margin call first.

5. If a short converted to delivery, cover the short delivery

A sell MIS you could not buy back, typically because the stock locked at upper circuit with no sellers, leaves you in short delivery. You owe shares you do not hold. The exchange runs an auction to buy those shares and deliver them to the original buyer on T plus two settlement, and you bear the auction penalty, computed from the settlement price. Until the auction completes, Zerodha blocks 120 per cent of the closing price against your account with the narration “Short delivery margin blocked for sale of [scrip name]”. Buying the shares yourself the same evening or next morning, where the scrip has reopened, is the only way to pre-empt the auction.

6. Account for the charge and the overnight risk

Every order the RMS team squares off costs Rs 50 plus 18 per cent GST. Beyond the charge, a carried-forward position exposes you to the gap between today’s close and tomorrow’s open, which on a circuit-bound scrip can be a further full circuit move against you. If you lack the margin to hold an NRML carry-forward, you also face a margin shortfall penalty levied by the exchange. The cheaper and safer path in every case is to flatten intraday positions yourself well before the cut-off.

Why the auto-square-off is a net, not a guarantee

Zerodha squares off open intraday positions automatically because an MIS, bracket or cover order is, by design, meant to close the same day; the leverage extended on it assumes no overnight exposure. The system fires market orders near the segment cut-off, around 3:20 pm for equity, to give the desk time to transact before the 3:30 pm close. But a market order can only fill if a counterparty exists at a tradable price. When the order book is one-sided, the mechanism has nothing to hit, and the position survives into delivery. This is why the policy language is explicit that the client carries the duty to square off, and the broker action is described as a safety net rather than an assurance.

The practical reading: treat the auto-square-off as a backstop for ordinary, liquid scrips on calm days, and never as cover for an illiquid or circuit-prone position. On a scrip you suspect could lock at a circuit, plan your exit minutes ahead of the cut-off, not at it.

The three failure modes in detail

Illiquidity is the quietest failure. A scrip with a few hundred shares a day in volume may simply have no resting bid when the square-off tries to sell, so the order rests unfilled. There is no error and no alert; the position just remains, and you discover it as a CNC line the next morning.

A circuit lock is the most damaging. Once a stock is frozen at its circuit, the book holds orders on one side only. A long stuck at lower circuit and a short stuck at upper circuit both convert to delivery, but the short is worse, because it carries the auction route and its penalty. SL-M with a trigger outside circuit limits is the related trap: a stop placed beyond the band can never trigger, so it gives no protection on the day the scrip gaps to its circuit.

The per-order quantity cap is the most mechanical. Because each auto-square-off market order is limited to 30,000 quantity, a position larger than that is squared off across several orders, and on a thin scrip the later slices may not fill. The remainder converts. Splitting large intraday positions and exiting them yourself in slices, or using an iceberg order , keeps you in control of the fill rather than leaning on the cap.

How this connects to RMS rejections and conversions

A position that converts overnight often surfaces next as a related rejection or margin event. If you try to act on the converted line without the funds to support it, you may meet an RMS rejection . The “RMS: Auto Square Off Block” rejection specifically prevents placing fresh intraday orders in a scrip the desk is squaring off. If you decide to hold a converted long deliberately, you are effectively doing a MIS to CNC conversion , which you can also initiate yourself before the cut-off if you know in advance you want to carry the trade. Doing the conversion knowingly, rather than letting the system convert by default, lets you confirm you have the cash first.

What can go wrong

Assuming the square-off always fires: on an illiquid or circuit-locked scrip the market order has nothing to hit, so the position converts to delivery despite the cut-off passing.
Trying a fresh MIS order after the cut-off: fresh MIS and CO orders are blocked once the square-off time passes; exit the converted position using CNC or NRML instead.
Ignoring a converted short: an unsquared sell becomes short delivery, goes to exchange auction on T plus two, and draws an auction penalty plus a 120 per cent closing-price block.
Holding a converted long without funds: if you neither add cash nor sell, the RMS desk sells it the next day without a separate margin call, at a price you do not control.
Forgetting the charge: each RMS square-off costs Rs 50 plus 18 per cent GST per order; exiting yourself before the cut-off avoids it.
Oversized single positions: the 30,000 per-order auto-square-off cap can leave a remainder open on a thin scrip; split and exit large positions yourself.

External references

References

Zerodha support, Why is my MIS or CO position not auto squared off? (as of 21 June 2026).
Zerodha support, What will happen to my intraday (MIS/CO) position if circuit limits are hit? (as of 21 June 2026).
Zerodha Policies and Procedures, auto square-off and intraday product policy (as of 21 June 2026).
NSE India, intraday risk management and settlement framework, T plus two equity settlement.

Frequently asked questions

Why was my intraday position not auto-squared-off on Zerodha?

Usually because the scrip was illiquid or locked at a circuit so no counter-orders existed, the order quantity was above the 30,000 per-order auto-square-off cap, or an exchange or RMS delay intervened. The auto-square-off is a safety net, not a guarantee.

What happens to an MIS position that is not squared off the same day?

It converts overnight to a Cash and Carry (CNC) delivery position, or an NRML carry-forward in F&O. You then carry overnight gap risk and, if a sell did not square off, possible short delivery and an auction penalty.

Is there a charge if Zerodha squares off my position?

Yes. Zerodha applies an auto-square-off charge of Rs 50 plus 18 per cent GST for each order squared off by its RMS team. Exiting yourself before the cut-off avoids this charge.

Can I place a fresh MIS order after the auto-square-off time to fix it?

No. Fresh MIS or CO orders are blocked after the auto-square-off cut-off. If a position has already converted to CNC or NRML, you exit it using that product, not a new intraday order.

What is the risk if a short intraday position converts to delivery?

You face short delivery. The exchange auctions shares to deliver to the buyer on T plus two settlement and charges you the auction penalty based on the settlement price. Zerodha blocks 120 per cent of the closing price until the auction completes.

Does the auto-square-off happen at one fixed time for all segments?

No. Equity MIS squares off around 3:20 pm, F&O later, and currency and commodity at their own session cut-offs. See the intraday auto square-off timings article for the segment-wise schedule.

Will Zerodha square off a carried-forward position the next day?

Yes, if you lack the funds to hold it. The RMS desk squares off such a position the next trading day without a margin call when the necessary cash is not available in the account.

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Last reviewed: 21 June 2026
Conflicts of interest: WebNotes is independent. No relationship with any broker, registrar or bank named in this article.