If there are no sellers in the auction market and the shares could not be bought, the exchange conducts a Close-out Settlement based on the trading category of the concerned share, and the trade is cash-settled on T+2. The buyer in the transaction gets a full refund, which will be borne by the seller. The close-out price at which the trade will be settled is the higher of:

• The highest price recorded in that scrip on the exchange from the trade day (T) till the auction day (T+1), OR
• 20% above the official closing price on the auction day.

This also depends on the trading category of the concerned share. For example, Mr Ravi buys 1000 shares of ITC for Rs. 200 per share on Dec 1st. He does not get delivery for this trade as the seller defaults. Further, these shares could not be purchased from the auction market on T+1 either. As a result, Mr Ravi's trade will be cash-settled as per the applicable close-out procedure.

Day	Price (High of the Day)
Dec 1st (T)	204
Dec 2nd (T+1)	210

In this case, the close-out price at which the trade will be settled is the higher of:

• Rs. 210- The highest trade price from the trade day to the auction day, OR
• Rs. 250.80- 20% above the official closing price on the auction day. Assuming the closing price on T+2 to be Rs. 209; Rs. 209 + 20% of Rs. 209 = Rs. 250.80

Hence: 1. The close-out price is Rs. 250.80 2. The cash-settled amount (to Mr. Ravi's trading account) is Rs. 2, 50,800 (1000 * Rs. 250.80) To learn more about the close-out procedure, visit the NSE and BSE websites.