Auto Delivery-out

Before pay-in, a clearing member normally has to instruct its DP to move securities from its CM Pool Account to its CM Delivery Account. That instruction is called a delivery-out, or DO.

Some clearing members do not have to give this instruction manually every time. If they authorise their Clearing Corporation in advance, NSDL's system can generate the delivery-out for them automatically, based on their net delivery obligations. This is called Auto Delivery-out, or Auto DO.

The clearing member can still see these auto-generated instructions, through downloads, an Auto DO Report from the DP, or an internet facility.

The Clearing Corporation generates Auto DOs on behalf of clearing members who have authorised it, timed around the download of delivery obligations to those members. Authorised clearing members do not need to give delivery-out instruction forms to their Participants for these obligations.

Auto DOs are not generated in 2 specific situations, where the clearing member must still submit a manual delivery-out instruction: Irreversible Delivery-out (IDO), used for margin payment or exemption purposes — if an IDO is given before the Auto DO is generated, the member must cancel the corresponding Auto DO and give a fresh instruction for the balance quantity; if given after, the Auto DO must first be cancelled before the IDO executes. And shifting of a CM Settlement Account from one Participant to another — Auto DOs are generated only for the one CM Settlement Account designated for pay-out as of the generation date, so a member must watch both accounts carefully during a shift, a rule applicable only at NSDL.

This facility is an NSDL feature; there is no equivalent Auto DO concept at CDSL.

A clearing member, Suvidha Securities, has authorised its Clearing Corporation to generate Auto DOs on its behalf. On a given settlement day, its net delivery obligation across all trades comes to 2,000 shares worth Rs 9,60,000 at Rs 480 each. The Clearing Corporation generates the delivery-out instruction automatically, around the time delivery obligations are downloaded, and Suvidha Securities never has to submit a manual DO form for this quantity.

Suppose Suvidha Securities separately needs to give an Irreversible Delivery-out of 500 of those shares to meet a margin exemption, and it submits that IDO before the day's Auto DO is generated. It must then ensure a subsequent instruction cancels the corresponding portion of the Auto DO and covers only the remaining 1,500 shares, so the two instructions do not double-count the same delivery obligation.

Chapter 8, section 8.3.1, under "Tracking of securities received for pay-in", sets out Auto Delivery-out as an NSDL-specific automation, immediately listing the two exceptions — IDOs and CM Settlement Account shifting — where a manual instruction is still required.

Expect a question testing whether Auto DO is available at both depositories (no — NSDL only) and on which two situations still require a manual delivery-out instruction even for an authorised clearing member.

• Auto Delivery-out is an NSDL feature only — CDSL has no equivalent automatic generation of delivery-out instructions.
• Irreversible Delivery-out (IDO) instructions are never covered by Auto DO — a clearing member must always give these manually, and must coordinate the sequencing carefully if an Auto DO for the same quantity also exists.
• Auto DOs apply to only one CM Settlement Account at a time — the one designated for pay-out as of the generation date — so shifting accounts between Participants needs careful monitoring of both the old and new accounts.
• Do not confuse this with auto pay-in, which is a separate, later step in the settlement chain, governing how securities already delivered are considered for pay-in to the Clearing Corporation.