Self – Auction Close Out
Self – Auction

The Delivery and Receive Orders are issued by BSE to the Members after netting off their purchase and sell transactions in Securities where netting of purchase and sell positions is permitted. It is likely in some cases, a selling client has failed to deliver the shares sold in a settlement to a Member. However, this may not result in failure of the Member to deliver the shares to the Clearing House as there was a purchase transaction of his some other buying client in the same Security and the same was netted off for the purpose of settlement. In such a case, the Member would require shares so that he can deliver the same to his buying client, which otherwise would have taken place from the delivery of shares by his selling client. To provide shares to the Members in such cases, they have been given an option to submit the details of such internal shortages on floppies on pay-in day for conducting self-auction (i.e., as if they have defaulted in delivery of shares to the Clearing House). These shortages are clubbed with the normal shortages in a settlement arrived at by the Clearing House and the auction is conducted by the Clearing House for the combined shortages.

Close-out

Close-out is effected for cases when no offer for a particular Security is received in an auction or when Members who offer the Securities in auction, fail to deliver the same or shortages pertaining to those groups of securities for which auctions are not conducted. The close-out rates for different segments are as under

  • 'A', 'B' and 'F' group
    • The close-out rate is higher of the following rates :
    • The highest rate of the Security from the trading day to the day on which the auction is conducted for the respective settlement.
    • 20% above the closing rate as on the day of auction/close out of the respective settlement.
  • "Odd Lot", "T" and "Z" group and Patawat objections
    • The closeout rate is higher of the following rates:
    • The highest rate of the Security from the day of trading to the day of auction of the respective settlements;
    • 10% above the closing rate as on the day of auction/ close out of the respective settlement.
  • "G" group
    • In case of shortages in "G" group, the shortages are closed out at Zero Coupon Yield Curve (ZCYC) plus a 5% penalty.

    The closeout amounts are debited to the bank accounts of those Members who have failed to deliver the securities against their sale obligations and credited to the bank accounts of those Members who had bought the securities but did not receive the same.