Securities Settlement

The final obligation for securities pay-in is downloaded to the members and custodians on the T+1 day. The members / custodians make available the required securities for pay-in with the depository participants on the pay-in day by 10.30 a. m. To facilitate this members are required to open pool accounts with depository participants of both the depositories, NSDL and CDSL.

Contact Details of Depositories

Subsequent to receipt of pay-in instructions from the depositories, NSE Clearing determines the shortages after which pay-out files are generated and released to the depositories by 3.30 p.m.

Direct payout to client demat accounts

SEBI vide circular reference number SEBI/HO/MIRSD/MIRSD-PoD1/P/CIR/2024/75 dated June 5, 2024 , has mandated that the payout of securities be credited directly to the client account. This is to protect clients’ securities and to ensure that the stock brokers segregate securities  of the  client  or clients so  that  they are  not vulnerable to misuse. 

• The direct payout is not applicable for clients having arrangement with Custodians.
• Set up of primary demat accounts

Exchanges have set forth the requirements to trading members to update the primary demat accounts for all existing UCCs in the UCC database. 

Such demat accounts, once verified by depositories shall be used by the CCs to release instructions to depositories to credit the securities payout to the clients’ accounts.

• Hop/skip entries through CM/TM pool accounts
  • Based on the payout instructions received from the CCs, the depositories  transfer the securities pay-out to the primary demat account of the client with hop/skip entries in the CM pool and TM pool account. 
  • Here securities will technically move from the CCs to the Clearing member pool account, then to the Trading member pool account and finally to the client’s demat account.
  • All Clearing members and trading members are required to open Clearing member pool and Trading Member pool account respectively with depositories for this purpose.
• Release of payout with pledge
  • CC provides a facility to clearing members to release pay-out to clients with pledge in favour of Client Unpaid Securities Pledgee account (CUSPA) in case the client or TM is unpaid.
  • CCs also provides facility to members to release pay-out with pledge in favour of Client Securities Under Margin Funding Account (CSMFA) where TMs are offering Margin trading facility (MTF) to their clients. 
  • Members are required to upload such requests to the CC through a file based facility.
  • Based on such requests which are successfully processed, CC releases pay-out to clients under Unpaid/ MTF pledge flag. Depositories are required to release the pay-out to clients and mark a pledge in favor of CUSPA/ CSMFA account of clearing/trading member, as the case may be. 
  • Clearing members and trading members are required to open CM CUSPA and TM CUSPA accounts in the depositories where their client accounts are present, for the above.
• Credit of payout to clearing member’s pool account 

In the following cases the securities payout is credited to the clearing member’s pool account:  ​​​​​​

• Payout of proprietary account including devolvement on account of custodian rejections
• Absence of verified primary demat account
• Pay-in received from a clearing member which is in excess of the gross of net sell obligation of their selling clients 
• Rejection of direct payout instructions by depositories
• Payout to -DR clients identified by exchanges

• Mandatory auction for internal shortages

• It shall be mandatory for CM/TM to handle internal shortages through the process of auction as specified by CCs. 
• All the internal shortages are identified by NCL and sent for auction.
• For clearing members of F&O that are SEBI registered Custodian, NCL shall facilitate auction for internal shortage with existing file-based mechanism.

The guidelines for auction of internal shortages are summarized as below:

• NCL shall identify internal shortages by comparing gross sell obligation of clearing member vis-a-vis pay-in received for clearing member for both depositories. 
• The gross sell obligation of clearing member shall be computed as gross of net sell obligation across all clients of a clearing member for a security. 
• Member shall ensure to provide entire gross sell obligation as security pay-in to CC. 
• Where member effects payout to receiving clients on its own and does not provide the same to CC in pay-in, CC shall consider such  quantities as short received for internal shortage computation. 
• It shall be mandatory for members to pay valuation amount (settlement price of the security and additional mark up as specified by CC from time to time) for internal shortages identified by CC as per timelines specified by CC. 
• Where member has not paid valuation amount CC shall not conduct auction for the internal shortage. 
• While CC will identify and provide details of internal shortages and the valuation amount to be paid by member, members shall have internal processes to identify the internal shortages in advance and provide the valuation amount by specified timelines. 
• Where auction is not conducted on account of reason such as valuation debit not paid by member or on account of excess pay in by any member/clients or in case of corporate action in security or where the auction by CC was unsuccessful or file not uploaded by custodian member or any other reason specified from time to time, the brokers/members shall pass close out entry in the books at the auction rate and in absence of auction rate at the close out rate. 
• In case auction is not conducted due to receipt of excess payin, the credit shall be given to client who has done excess pay-in. 
• There shall be a facilitation fees of 1% on the value of security auctioned considering the price of security on day prior to auction. The amount including applicable taxes shall be collected on monthly basis.
• Members shall voluntarily bring to the notice of CC, where an auction profit is being identified by the members at the client level, including internal shortages. 
• The details of reports to be referred for auction of internal shortages are given in circular  CMPT66688 dated February 14, 2025.

Revised deadline for payout of securities:

• In view of release of securities directly to client demat accounts, the final securities pay-out deadline has been extended to 3:30 pm from existing 1:30 pm vide SEBI circular SEBI/HO/MRD/MRD-PoD-2/P/CIR/2024/137 dated October 10, 2024. 
• The final reports will be downloaded to members after receipt and processing of final confirmations from both depositories.

Important circulars for direct payout to clients’ demat accounts and auction for internal shortages :

Securities Payout to Members Preferred Depository

Members have a facility of preferred depository wherein payout receivable by members can be credited to the specified pool account in either of the depositories viz. NSDL or CDSL.

Where the payout is transferred by CC to the member’s pool account the same will get credited to the preferred pool account of the member. In the event of a failure of a client payout instruction at the depository, the payout shall be effected to the pool account in the source depository.

• Members shall ensure that they get their account details updated in case of shifting /change of account etc to ensure that the payout happens to the preferred depository pool account.
• Members may avail the said facility by providing details in the form of a letter (refer Capital Market -consolidated circular Part-C) along with the client master report of the respective depository pool account. Also, the same letter has to be provided in case of closure of the said preferred depository pool account along with the client master report of the respective depository pool account.
• Members may take note that they shall continue to maintain pool accounts in both the depositories viz NSDL and CDSL.

Reporting of details of securities Pay-in / Pay-out shortages by Members

• Members are required to upload files in the specified format with respect to details of securities pay-in / pay-out shortages. The file is to be uploaded only in case of securities Pay-in / Pay-out shortages (including internal shortages). The files in the specified format shall be uploaded by the members to the clearing corporation till S+5 working day basis, where 'S' is the settlement date for the respective settlement. For every valid file uploaded by member, return file shall be generated with the indication of the success/rejection of the file and the records. This shall be purely a validation of the correctness of the file format. In case members intend to modify the data in a file, which has been already submitted to Clearing Corporation, the member would be having an opportunity to submit the revised file after carrying out the modifications before the cut off date. Members will have to submit all the files in a running sequence of batch numbers across segments. If members fail to submit an earlier batch file then the subsequent batches will not be processed. However, if the earlier file was completely rejected, the same batch number should be used for the subsequent corrected file. At times, the files are not successfully uploaded due to certain technical/manual errors. Each of such rejected file/ rejected record has the error code appended to the control/detail record.

     Error code and their meaning