EQUITY
Companies usually offer a portion of their ownership to the public in exchange for money. Investors
purchase a share of ownership by buying shares of the company and such company stocks are referred to as ‘Equities’.
Equities are listed and traded on the stock market. These could be in the primary or secondary market.
In the primary market, companies get listed through an Initial Public Offering through which new securities are available in the
primary market. In the secondary market, investors buy or sell securities, which have already been issued.
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PTST Means
In a normal equity delivery trade, the transaction is complete in T+1 day where T is the day of trading. The buyer gets shares in his demat account and the seller gets money in T+ day. So, if you buy some shares of a company on Tuesday, the shares will be credited in your demat account on Wednesday. While counting T+1 day, holidays in exchanges are excluded. So, if there's a holiday in between then the delivery period is extended.
What if you got an opportunity to book the profits or losses in between those 1 day? You cannot take this opportunity as it's a normal order. This may result in losses for the trader.
PTST solves this problem of traders by allowing them to buy or sell their securities before these are credited in their demat account. This helps traders to benefit from short-term volatility in the price of the stocks.
How to do PTST with a broker?
To do PTST trades, you just have to buy the stock using the PTST product type and the next day sell the stock using the Delivery product type. The broker takes care of these transactions in the background.
Customer does not have to choose any special-order type or follow complex steps to use PTST facility. No special permissions or approvals required for this facility.
Note: That PTST trades are not allowed on Trade to Trade stocks and Stocks under GSM (Graded surveillance measures) or ASM (Additional surveillance measures).
PTST Key Features
1. In PTST, you can sell a share before it is credited in your account. This option is available for one trading day after the buy order. On the third day, shares will be delivered in your demat account, and you can place a normal sell transaction.
2. The PTST facility is only available for scripts that are approved by the share broker.
3. PTST is not available for stocks in the T2T Segment (Trade to Trade Segment) wherein you have to compulsory take delivery of the stocks, stocks under ASM and GSM categories.
PTST Advantages
1. It allows you to benefit from the short-term volatility or increase/decrease in the price of the stocks.
2. PTST trades do not attract Demat Debit Transaction Charges as shares are not credited in your demat account.
3. If you find intra-day trading unprofitable, then PTST gives 1 more day to your trades to improve its performance.
PTST Disadvantages
1. PTST also comes with the risk of short delivery. Let's assume you buy 100 shares under PTST today and sell the 100 shares the next day. Now, what if the person who sold you 100 shares didn't deliver to you for some reason. Of course, he will be penalized by the exchange. The exchange will auction the shares and the person will be charged a penalty up to 20% of the value of the shares. Your shares will be credited on the next i.e. T+3 days.
“In view of the new SEBI implemented collection of upfront margin in cash segment, PTST product is not offered currently and shall be made LIVE once there is clarity on the subject matter and the systems are ready to offer the product.”