Technical snag at NSDL delays settlement of trades since Tuesday

Mumbai : Atechnical glitch at National Securities Depository (NSDL) resulted in a delay in settlement of trades executed over the past three days. Shares bought by several investors associated with the depository since Tuesday are yet to reflect in their demat accounts, preventing them from selling those holdings, said officials at multiple brokerages on Thursday.

The likely cause is a technical disruption inside NSDL that affected its ability to process inter-depository transfers with its bigger rival, CDSL. Since several trading settlements often require securities to move across the two depositories––a routine process, any snag in NSDL’s inter-depository routing hinders the credit of shares to individual client demat accounts.

As a result, securities have been credited to broker pool accounts but have not been allocated to end-investor demat accounts, leaving clients temporarily unable to trade those holdings, sources said.

“This was not some isolated case; clients of all broking firms face issues because of the issue in inter-depository transfer emanating from NSDL,” said the chief of a brokerage on condition of anonymity.

While brokers did not report similar settlement delays at rival depository CDSL, NSDL is understood to have moved to its Disaster Recovery (DR) site to address the issue. The exact reason behind the snag at NSDL could not be ascertained. Email queries to NSDL remained unanswered until press time.

India’s equity settlement process follows a T+1 cycle. After trades are completed on the exchange, the clearing corporation settles them the next day before 10:30 am by collecting securities and funds from brokers and releasing payouts by the afternoon, around 3:30 pm. After this, depositories credit shares to investors’ demat accounts.
This week, the technical disruption at NSDL delayed this final step.“Due to a glitch on NSDL’s end, inter-depository transfer of shares has been impacted, due to which brokers were unable to complete pay-ins to clearing corporations,” said the chief operating officer of a retail brokerage who did not want to be named.

“Clearing corporations have transferred some shares from CDSL to the brokers’ CDSL Pool account, which ideally should have gone directly to customers’ Demat accounts. NSDL was unable to do BOD (Beginning Of Day) of its systems to the next working day until this afternoon, due to which operations have been delayed.”BOD is the depository’s opening snapshot of the investors’ demat account. If shares aren’t there at the start of the day, investors can’t use or sell them that day.