Regardless of whether you are an experienced trader or a newbie, one term that you must surely have across is Delivery Instruction Slip or DIS slip. When you are conducting a transaction from your trading and Demat account, this is one step that all traders encounter. You may have been confused about the Delivery Instruction Slip meaning and wondered, “what is DIS slip?”.
Read on to find out exactly what a delivery instruction slip is and what happens if it is rejected.
The DIS slip is essentially like a cheque but for your Demat account transactions. It is used to facilitate and authorize the sale or transfer of shares from one account to another. In order to conduct a transaction, you are required to submit a DIS slip to your Demat account provider or DP (depository participant). On completing this authorization step, the shares will be transferred from your personal account to the HUF Demat.
This signed document is specifically important for offline trading, as it permits the DP to carry out the transfer on your behalf. In online transactions, you can simply give your broker/intermediary the power of attorney (PoA) to conduct these transactions. The benefit of online trading, you do not have to worry about DIS rejection or submission.
The DIS could get rejected for below 6 reasons
1. The stock’s ISIN number may be wrong
2. There may be a writing error in the number of shares
3. Market transactions and the off-market transactions may have been labelled as the other.
4. There may be a signature mismatch
5. There may not be enough shares in the seller’s Demat account
6. The DIS may be overwritten
In India, the markets are run on the T+2 rolling settlement bases. The trader has to submit the DIS slip to their broker prior to T+1’s first half. It is recommended that the DIS is submitted on the exact day the trade happens, so there is adequate time to catch the error and rectify it.
However, if the errors are not resolved, traders may have to face short delivery. Short delivery means that the stocks are auctioned and sold off to the buyer who makes the highest bid. Thus, in the event that the DIS slip is rejected, you may face significant losses during the auction if the stock prices see a sharp increase in that period.
DIS slip rejection can easily be corrected in off-market transfers as there is no risk of an auction being triggered. Your DP can get in touch with you to fix the error. However, in market trades, you may have to negotiate and make an appeal with your broker in order to try and manage the incurred debit. The best way to avoid DIS rejection is to double-check that the format is correct and submitted on time to your DP.
The delivery instruction slip is a document that acts as an authorization document that helps facilitate and track Demat account transactions in the trading market. DIS slip rejection can lead to undesirable consequences and huge losses. Hence, it is vital that traders ensure the DIS is error-free and submitted in a timely manner in order to avoid rejection and carry out transfers efficiently.
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