For security short delivered the Clearing Corporation shall conduct a buy-in auction on T+2 day and the settlement of the auction shall be on T+3 day (where T is the intention day).
The defaulting clearing member shall be debited the invoice price of the security as valuation debit
- In respect of successful auction, the defaulting clearing member shall be debited with the following.
The actual auction price (plus accrued interest till auction settlement date)
Difference in invoice price and auction price if the auction price is less than the invoice price
A penalty of 2% of the face value of security short delivered which shall be passed on to the buying clearing member who shall pass it on to the buying client.
Financial close-out shall be effected in the following cases and in the manner detailed under:
In case of unsuccessful auction, transaction shall be closed out wherein the defaulting clearing member shall be debited by:
invoice price, and
a penalty of 5% of the face value of security short delivered which shall be passed on to the passed on to the buying clearing member who shall pass it on to the buying client.
In case of seller in an auction failing to honour the auction obligations, the clearing member shall be debited by:
invoice price, and
a penalty of 3% of the face value of security short delivered which shall be passed on to the passed on to the buying clearing member who shall pass it on to the buying client.
In case the clearing member fails to deliver securities on five (5) occasions in past six (6) months then the Clearing Corporation may advise the Exchange to withdraw any or all of the membership rights of the clearing member including the withdrawal of trading facilities of all trading members and/ or clearing facility of custodial participants clearing through such clearing members for a period of seven (7) days.
Non-fulfilment of delivery settlement by the scheduled date and time is treated as a violation.
In case of a settlement shortage of Rs. 5 lakhs or more the Clearing Corporation may advise the Exchange to withdraw any or all of the membership rights of the clearing member including the withdrawal of trading facilities of all trading members and/ or clearing facility of custodial participants clearing through such clearing members and withhold the pay-out due to the clearing member.
In case of settlement shortage of less than Rs.5 lakhs the amount of shortage shall be blocked from the effective deposits of the clearing member to the extent of funds shortage. This may lead to the withdrawal of the trading facility of the clearing member and the associated trading member.
Further, if the clearing member is short for an amount of Rs 2 lakhs or more in six or more occasions in the preceding three months, the Clearing Corporation may advise the Exchange to withdraw any or all of the membership rights of the clearing member including the withdrawal of trading facilities of all trading members and/ or clearing facility of custodial participants clearing through such clearing members and withhold the pay-out due to the clearing member.
In case of any over-night settlement shortages penal charges of 0.07% per day of shortage shall be levied.