YES Bank short-squeeze: Delivery now allowed for last Friday sellers

PALAK SHAH Mumbai | Updated on March 17, 2020 Published on March 16, 2020

A short-squeeze due to delivery and settlement chaos in YES Bank triggered a 45 per cent rise in its share price. After the short-squeeze, the depository participant NSDL said on Monday that it will allow delivery of those of those players who had sold on Friday.

Supply in the counter saw massive curbs after government announced freeze in YES Bank shareholding for three years. There was a scramble to buy shares in the derivatives segment or square up positions as the exchange advanced the date of pushing out YES Bank from futures and options segment to March 19 from March 27 earlier.

As part of a YES Bank restructuring scheme, the government said that 75 per cent of shareholding in the company will be frozen for three years effective March 13. The government announcement came after market hours. But those who had sold their shares on March 13 and were to give delivery instructions on Monday were in for a shock. Also, the announcement by the NSE with regard to pushing out the counter early from derivative segment played it rose in building up triggered a buying pressure for the stock, brokers said.

Later during the day, share depository NSDL issued a circular, which said that those who had sold YES Bank shares on Friday would be able to deliver them and such amount of shares would be de freezed.

YES Bank counter in the coming days is likely to dry up as their won’t be sellers at all. Government has allowed only 25 per cent of shareholding to be sold now. Equity futures and options trades are now delivery-settled, wherein the counter party can seek delivery of shares. But if 75 per cent of delivery is frozen, it leads to a scramble in the markets. BusinessLine reported that YES Bank shares would see wild swings as those who are short in the counter will try to square-up their position, pushing the share price higher.

Published on March 16, 2020
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