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: 

1. The HDFC Bank shares bought on 19th May (T Day) will be delivered on 21st May (T+2 Days) i.e. on Friday into the FYERS Pool A/C by the Clearing Corporation.
2. The shares will be moved from our said pool account to the Clearing Corporation directly by means of Early payin. This is essentially done to avoid the lengthy process of crediting the client’s account with the shares and then debiting it once again, towards the settlement of the sale transaction.
3. The DP charges were not applicable to the client as the settlement took place by avoiding the lengthy process of debiting/crediting the shares from the client’s demat account.

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 –

1. Bonus/Split shares would be credited to the brokers’ A/C; 
2. Brokers receive the dividends from the BTST stock.

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:

1. 1000 shares of HDFC Bank were bought on 19th May (Wednesday), sold on 20th May (Thursday) resulting in a BTST transaction.
2. Shares bought on Wednesday (T day) will be credited to your Demat account on Friday i.e. T+2 days once the same is received from the Clearing Corporation
3. On Friday when the shares get credited into your demat account, the shares will be ‘EPI Marked’ for delivery towards the sale transaction executed on Thursday.
4. EPI marked shares won’t be visible in the front/back end.
5. The EPI marked shares on Friday will be debited on the next clearing day i.e. on 24th May (As per this example) and the settlement will be completed.
6. The DP charges will be applicable to the client as the shares were credited into your Demat on Friday (T+2) and then debited on Monday (T+3).

The advantages of this process towards corporate actions are as follows:

1. Dividends will be credited to your bank account, and there is no need for us to reconcile;
2. Bonus and splits would be credited to your Demat account;
3. In case of any TDS on dividends, the dividend issuing company will file against your PAN and would reflect in your tax credit statement (Form 26AS) instead of it being passed on from the Broker’s PAN.

The Applicable DP Charges on BTST is ₹12.5 + GST. (This includes both, CDSL & FYERS DP charges).