Internal Shortage Policy
Internal Shortage Policy
Internal Auction:
As per the Exchange Settlement Norms the Pay in Obligation for securities are netted at member level and only net obligation is paid in to the exchange. It could be possible that within the members client, there could be opposite positions in the same scrips, which then, necessitates the internal adjustment/netting. In case a seller client fails to deliver which was to be paid out for the account of another of our clients, such a situation necessitates the Internal Auction.
As per the present policy the methodology used for the internal shortage of the scrip traded is given below:
1. In case there is internal shortage there is a possibility that within the member client i.e. the buyer and seller are both Maverick clients and the seller defaults in delivery due to which the buyer may not receive the shares on T+1, the price will be determined by auction/close out price of the scrip as informed by NSE for that settlement or 20% above the official closing price on the auction day whichever is higher or internal close out price which will be calculated at highest closing price prevailing in the NSE from the first day of the relevant trading period till the day of closing out plus 3% penalty and other statutory charges.
2. Close-Out Policy: If auctioning is not possible (e.g., due to valuation payment failure), the shortage is closed out at the auction rate, or in its absence, at a penalty rate (highest price from trading day to T+1/T+2, plus 3-5% or 20% above the closing price).
Please note that the above procedure is expected to change in case NSE makes any changes in their auction procedure.
Brokerage on Auction: The Member shall charge auction brokerage as applicable on value to all short sellers
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ATTENTION INVESTORS!
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Beware of guaranteed returns:
Beware of fixed/guaranteed/regular returns/ capital protection schemes. Brokers or their authorized persons or any of their associates are not authorized to offer fixed/guaranteed/regular returns/ capital protection on your investment or authorized to enter into any loan agreement with you to pay interest on the funds offered by you. Please note that in case of default of a member claim for funds or securities given to the broker under any arrangement/ agreement of indicative return will not be accepted by the relevant Committee of the Exchange as per the approved norms. -
Do not keep funds idle:
Do not keep funds idle with the Stock Broker. Please note that your stock broker has to return the credit balance lying with them, within three working days in case you have not done any transaction within last 30 calendar days. Please note that in case of default of a Member, claim for funds and securities, without any transaction on the exchange will not be accepted by the relevant Committee of the Exchange as per the approved norms. -
Check account settlements:
Check the frequency of accounts settlement opted for. If you have opted for running account, please ensure that your broker settles your account and, in any case, not later than once in 90 days (or 30 days if you have opted for 30 days settlement). In case of declaration of trading member as defaulter, the claims of clients against such defaulter member would be subject to norms for eligibility of claims for compensation from IPF to the clients of the defaulter member. These norms are available on Exchange website at following link: https://www.nseindia.com/invest/about-defaulter-section. -
No direct security transfers:
Brokers are not permitted to accept transfer of securities as margin. Securities offered as margin/ collateral MUST remain in the account of the client and can be pledged to the broker only by way of ‘margin pledge’, created in the Depository system. Clients are not permitted to place any securities with the broker or associate of the broker or authorized person of the broker for any reason. Broker can take securities belonging to clients only for settlement of securities sold by the client. -
Keep contact details updated:
Always keep your contact details viz. Mobile number/Email ID updated with the stock broker. Email and mobile number is mandatory and you must provide the same to your broker for updation in Exchange records. You must immediately take up the matter with Stock Broker/Exchange if you are not receiving the messages from Exchange/Depositories regularly. -
Verify trades regularly:
Don't ignore any emails/SMSs received from the Exchange for trades done by you. Verify the same with the Contract notes/Statement of accounts received from your broker and report discrepancy, if any, to your broker in writing immediately and if the Stock Broker does not respond, please take this up with the Exchange/Depositories forthwith. -
Review weekly statements:
Check messages sent by Exchanges on a weekly basis regarding funds and securities balances reported by the trading member, compare it with the weekly statement of account sent by broker and immediately raise a concern to the exchange if you notice a discrepancy. -
Avoid unauthorized transfers:
Please do not transfer funds, for the purposes of trading to anyone, including an authorized person or an associate of the broker, other than a SEBI registered Stock broker.”