Scrip is used in the stock market by companies as an alternative legal tender. Most companies in the market issue it as a temporary document which acts as an acknowledgement of the fractional shares of the company after a spin-off or stock split. However, when you place a BTST or intraday order for scrip, your order will get rejected, but you can sell it after the stock gets delivered to the DEMAT account.
What is scrip?
Scrip is a financial instrument where companies get a chance to postpone the cash payment or payment of any securities to a later date by providing the recipient with an acknowledgement. This helps companies reduce their cash outflows. Simply put, a scrip is a document certifying debt on the company's part.
What is a BTST Order?
BTST, or Buy Today, Sell Tomorrow, is a kind of order in Indian stock exchanges that follows a settlement cycle of T+1 days. The settlement cycle is the time taken by a trade to get settled, where T stands for the day on which trade takes place. For instance, if someone places a BTST order on Monday, the stock will get credited to their account by Tuesday.
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What is an Intraday Order?
Intraday orders in the stock market mean that the trader is required to buy and sell the securities on the same day. These orders allow traders to benefit from the fluctuating share prices and book profit on the same trading day. If a trader does not sell the stocks by the end of the day, then the order will get squared off automatically.
Why is a BTST or Intraday Order Not Allowed in Scrip?
A buy today, sell tomorrow (BTST) or intraday order is not allowed in the stock market for the following reasons.
- Scrip is categorised under the T2T category.
- The scrip is an illiquid commodity in the stock market, and its orders will most likely end in short delivery. Short delivery means that the stock is not delivered to the exchange to get delivered into the buyer’s account.
What is the meaning of the T2T category?
The highly speculative stocks or securities suspected of being used for price manipulation are kept under the T2T category in the stock market. Intraday and BTST are restricted in these securities as they need to be compulsorily delivered to the trader's account. Therefore, if a trader tries to place an order before the shares get credited to their DEMAT account, the order gets rejected automatically.
How to Identify Stocks that are in the T2T category?
To make the identification of these stocks easier, stock exchanges have added a suffix to their name.
- In BSE, the letter T is added at the end of the Scrip name. For instance, if HUL ends up in the T2T category, it will be renamed “HUL T” in the stock exchange.
- Similarly, the suffix BE is added to the Scrip name in NSE. So the name will be “HUL BE.”
T and BE are the series' names in BSE and NSE, respectively. You can browse these series on their official page to locate the stocks under them.
How to Trade in Stocks Under the T2T Category?
If you want to trade in stocks which are under the T2T, here are a few tips:
- Buy the shares and wait for them to get delivered to your DEMAT account.
- While selling the shares, give the delivery of shares.
- As intraday trading or BTST order are not allowed in stocks in this category, you can only sell the stocks when they get delivered to the DEMAT account.
Final words
If your sell order gets rejected with the reason "Intraday/BTST is not allowed in scrip", know that it's for your good. As discussed earlier, Intraday or BTST is not allowed because the scrip falls under the T2T category. This category has stocks suspected of price manipulation and might lead you towards huge losses on your capital. However, if you wish to trade in these stocks, you can wait for these securities to get delivered to your account and then sell them.
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