Shortages in Obligations arising out of internal netting of trades –

 In a particular normal settlement, if one client of HDFC Securities Ltd. (“HSL”) has purchased a scrip and another client of HSL has sold the same scrip, in same settlement, then this results in internal netting of obligations as both are HSL customers. Further, if the Seller client in such case does not meet the Sell obligation, then the Buyer Client will also not receive the securities. This is termed as Internal shortage.

As per NCL circular NCL/CMPT/67001 dated March 06, 2025, HSL uses the internal auction mechanism of the clearing corporation (CC) to handle internal shortages. As per the said circular, the CC shall be identifying pay-in shortages including internal shortages and will conduct auction for internal shortages of the members. This mechanism shall be made applicable in respect of shortages of settlement no. 2025047 onwards (i.e March 07, 2025), for members other than SEBI registered Custodians. In the said Auction Market, Internal shortage Buy side customers will either get securities or it will be a Close-out.

 The securities so received in Auction Market will be directly credited to Buyer Client’s Demat a/c by the clearing corporation. HSL shall debit the Seller Client on the basis of the auction rate and seller shortage quantity.

 Where securities are not received in Auction Market, Clearing Corporation will provide the Close-out rate. Accordingly, HSL shall debit the Seller Client on the basis of the  Shortage quantity and Close-out Rate while crediting the Buyer Client on the basis of the  Buyer Shortage quantity and Close-out rate.

 Notes:

 1.There shall be a facilitation fees of 1% on the Auction value of security. The said facilitation fees shall  be passed on / debited to the Seller Shortage Client along with applicable GST for the same.

 2.In case where auction is successful but there is settlement shortage i.e. auction seller fails to deliver the securities on auction settlement day, Clearing Corporation shall conduct financial close out in accordance with the extant procedures.