Several investors who initiated trades on Tuesday were yet to get their shares or funds credited to their accounts by Wednesday night due to a settlement glitch between India’s top two depositories.
The problem cropped up at National Securities Depository Ltd (NSDL), but impacted the entire settlement process on Wednesday, four brokers told Mint.
“…we hereby inform you that the Company experienced a technical glitch pertaining to network connectivity issue with other depository resulting in temporary disruption of certain depository services. The issue is currently being resolved as BCP options for network connectivity with other depository is implemented,“ NSDL said in a disclosure to the BSE. Its shares ended flat at ₹996.7 on the exchange on Wednesday.
Trade settlement on Indian stock exchanges happens on the day following the transaction (T+1). If the shares were purchased by investor A and sold by investor B on Monday, A’s account must be credited with the shares and B’s account with the funds on Tuesday before 3 pm.
However, on Wednesday evening, settlements were delayed for clients who had custody or demat accounts with NSDL and rival Central Depository Services (India) Ltd, the brokers said.
Trading impact
Those who bought shares on Tuesday, hoping to sell them on Wednesday after receiving them in their accounts, were among the worst affected, said one of the brokers.
Assuming an average delivery of 30% to traded volumes, delivery volumes of close to ₹40,000 crore could face settlement issues.
The broker’s pool account vests with either NSDL or CDSL, or both. The client’s account can be with either of the two depositories. Shares are transferred by depositories from one client’s account to another on instructions from clearing corporations, which are subsidiaries of the National Stock Exchange (NSE) or BSE Ltd.
“The root cause for the delay in settlement is not known, but what started as an inter-depository issue has now spread to delays for clients using the same depository,” said A Balakrishnan, director, Geojit Technologies. “The entire settlement process has been delayed and is expected to be completed by late Wednesday night.”
Queries emailed to NSDL and CDSL remained unanswered until press time.
For trades punched on Tuesday, settlement was extended from 10:30 am on Wednesday to 6:30 pm and then to 10:30 pm. It’s expected to be further extended.
“Neither buyer nor seller has seen settlements happening so far,” said another broker. “Even though the platform where the individual traded reflects that the trade has happened, the same transaction in the depository participant account is not to be seen.”
