Earlier, we didn’t levy DP charges for Buy Today Sell Tomorrow (BTST) trades. However, with effect from 19th July 2021, DP charges will be levied on the BTST transactions due to the change in the settlement process.
Let us understand the impact of the changes in the settlement process and the applicability of DP charges.
Settlement process prior to 19th July 2021.
Let’s say you bought 1000 shares of HDFC Bank on 19th May (Wednesday), Sold the same on 20th May (Thursday) resulting in a BTST transaction. The following was the settlement process:
The process mentioned above, although simple, had few operational hazards. If the BTST trade was carried on the Ex-date of any particular corporate action, then –
As the shares were lying in the broker’s pool account on the day of corporate action, the Clearing Corporation considered the broker to be the owner of the shares.
As a brokerage, we had to reconcile each and every transaction and give the necessary credits to the clients. This was a hectic process on it’s own and had created a lot of confusion among clients. Hence, the new settlement process.
New Settlement process
As per the NSE circular dated 6th May 2021, The Clearing Corporation (CC) and depositories have introduced the new settlement process by making a few changes to the existing one. The clearing members can now ‘EPI Mark’ securities to be given to the clearing corporation for the client’s demat account by means of Early Payin (EPI), instead of moving the stocks from the client’s Demat to the FYERS pool and then to the CC.
With the new EPI process, we have changed the way BTST trades are settled to avoid operational hazards around corporate actions. Lets take up the same example as above to understand how it works:
The advantages of this process towards corporate actions are as follows:
The Applicable DP Charges on BTST is ₹12.5 + GST. (This includes both, CDSL & FYERS DP charges).