You may have heard the term delivery slip before, whether you're a beginner trader or an experienced trader in stock exchange trading.
You must sign the delivery instruction slip before you can sell shares from your trading or demat account. A DIS slip acts as a cheque and authorizes the participant to debit securities from your account, and then transfer the funds to the recipient's account. Online transactions allow you to give the power-of-attorney (PoA), to the broker, who will debit your demat account for you when you sell securities.
These elements are included in the delivery instruction slip:
You can transfer five ISINs per DIS. However, multiple delivery instructions slips may be used if you need to transfer more. The National Stock Exchange and Bombay Stock Exchange websites can be used to verify your ISIN.
You now know the basics of a DIS Slip. Now it's time to understand why a DIS Slip might be rejected.
Your DIS may be rejected for any of the reasons mentioned above. Your DIS must be submitted to the broker by the T+2 settlement period. The best way to get the slip is on the day of trade. This gives the broker the opportunity to correct any errors. Also, you have time to correct any errors in the delivery instruction slip. Sometimes, this might not be possible. It could result in a very short delivery.
Simply put, shares bought Monday or T Day are settled on Wednesday or T+2 days. Investors can only withdraw funds on the settlement date and not the date of the sale. You may have 100 shares of X company, but they are not in your demat account. This means that you won't be able give them to the buyer. The buyer is genuine and willing to pay for the shares. They have the right to the same. The exchange will then auction off the short delivery shares, where a third party will compensate for the lack of shares. The short seller will need to pay additional fees for selling shares, and the buyer of the shares must make up the difference. Short delivery can lead to losses and is therefore a risk.
Rejection of delivery instructions slips in off-market transfers can be rectified easily since there is no auction risk. You may be contacted by the depository participant or DP to correct the error.
You may need to appeal to your broker in order to adjust the debit. If you have enough liquidity, the broker might agree to adjust your debit.
It is best to carefully examine your DIS slip form, complete it correctly and make sure you are correct before you send it to the broker.
The delivery instruction slip acts as a cheque that is issued by the bank and contains instructions for debt securities to be transferred to the account of the recipient. You must carefully fill out the form and cross-check all elements. Any mistake could result in rejection. It could lead to your stock being sold and you taking losses.