markets · advanced
Auction settlement
Auction settlement is the NSE/BSE and clearing-corporation process used when a seller fails to deliver shares.
Short-delivered quantities in Indian cash settlement can be closed out through a settlement auction.
The defaulting seller bears auction price differences and related charges per exchange rules.
Buyers who did not receive shares are made whole through clearing-corporation processes.
Modern fails are discussed as short delivery and auction settlement; classic bad delivery is largely obsolete after demat.
Part of the Market Pulse Term of the Day series — factual market vocabulary, not investment advice.