Order rejected by upstox

Why did Upstox blocked my eq sell order in jet airways today.?

1 Like

When shares are sold, only the person who has it in a demat account can sell it for delivery.
And the person who buys the shares is supposed to get the shares in his demat within T+2 days.

Now suppose, You have sold Jet Airways in intraday while you do not have that shares in your demat account, and to make things worse, at the very end of the market, it became illiquid and your intraday shares didn’t go square off.

So, as a seller, you are in default in delivery of shares to the owner.

Now, NSE/BSE i.e. exchanges will hold “Auction” for those undelivered shares. It happens on T+2 day. The window for auction is 14:00 - 14:45. Clients of the broker where default happens cannot participate for the auction in the same script.

We generally use brokers which will have a high user base and hence the worst part is - We cannot participate as there will be some client of the broker who will have the default too.

The auction price is taken at the lowest price offered in the auction which is the normal theory. Highest price cannot be 20% from LTP and Lowest price cannot be 20% from LTP.

In the case of Jet Airways, You can stay assured you will get an exit at 20% up from LTP.
So if the LTP is 80 and you have intraday shares running; imagine have an exit at 80 + 20% of 80 = 96.

Aside from jet, if it is some illiquid small cap/mid cap and there is no existing shareholder in the auction, You will be settled at Highest Price between Tday to the auction day or 20% above the closing price on the auction day, whichever is higher

Note, People use extreme leverage in intraday.