YES Bank jams pay-in and pay-out in stock markets

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

The stock brokers on Tuesday said they were facing pay-in and pay-out problem. The core cause of this has been chaotic settlement in YES Bank shares. The pay-out of brokers’ funds was being delayed and the final settlement of amount that should have happened on Monday was being done still at around 5 am on Tuesday, sources told BusinessLine. Usually, pay-out happens at 11 pm but on Monday and Tuesday it was delayed for long hours. This led brokers not giving additional trading positions to clients.

Even a clear picture of investor portfolio was not being reflected by depository participants, which created problem in selling or giving delivery of those shares on Tuesday, the sources said. Many brokers were restricting their clients from taking any sell call on shares as their portfolio was not properly reflecting their holding, traders said.

Enabling lock-in removal

Speaking to BusinessLine, GV Nageswara Rao, CEO & MD, NSDL, said, “Pay-in was delayed to enable lock-in to be removed for investors who had settlement obligation as otherwise such investors would not have been able to deliver.”

According to Rao, they had to allow investors and traders to delivery of shares on Monday and Tuesday if they had sold them on Friday. YES Bank had to bring into effect a corporate action for which it had to identify those who sold their shares on Friday and had to deliver them on Monday. The clearing corporations of stock exchanges had the task to identify such traders.

Lending and borrowing in YES Bank shares too has been high for the past few days as those who had shorted the shares were scouting for borrowing shares to give delivery, brokers said.

Traders in YES Bank counter were caught up in a peculiar situation. On Friday, 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. On this basis, depository participants (DPs) issued a circular and said that they had already frozen 75 per cent shares of YES Bank of each of their demat account holders as on March 13.

Scramble for positions

Brokers say those who sold their shares on Thursday and Friday and were planning to issue delivery instructions on Monday were in for a shock. Also worried were those who have indulged in trading in the bank’s shares in the derivative segment as they scrambled to take positions as the share kept rising due to short supply. YES Bank share price has gained more than 50 per cent in just two trading sessions.

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.

Based on this on Monday, the processing of delivery instructions with regard to trading in YES Bank was being done with a delayed effect, which had a domino effect on wider settlement too as the system got jammed, brokers said.

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Published on March 17, 2020
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