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What are the risks involved in BTST?

BTST (Buy Today Sell Tomorrow) - Trades where you buy shares and sell it on T+1 day or T+2 Day before the stock is settled & delivered into your DEMAT account.

The risk with BTST trades is that since you are selling shares that aren't in your DEMAT account yet, you are relying on the seller whom you bought the shares from to give you the stock. If the seller defaults on giving you the shares i.e in the event of short delivery, your obligation as a seller to deliver shares won't be met and you will face the risk of auction penalty which can be up to 20% of the value of stock short delivered.

Read this article for a detailed explanation regarding BTST & the risks involved.