Compulsory Delivery Segment
The Compulsory Delivery (CD) segment is a category of NSE and BSE equity stocks—typically illiquid, small, or surveillance-flagged securities—where all trades, whether intended as intraday or delivery-based, must result in actual physical delivery of shares, with no intraday netting permitted.
In the mainstream equity cash market, trades are netted at the clearing corporation level—a buyer who also sold the same stock on the same day pays or receives only the net difference in quantity, not the gross of both legs. The Compulsory Delivery segment eliminates this netting. Every trade in a CD-segment stock, regardless of the trader's intention, must be settled through actual delivery of securities. If a trader buys 100 shares and sells 100 shares of the same CD stock on the same day, they cannot net these positions—they must deliver 100 shares for the sale and receive 100 shares for the purchase separately.
SEBI introduced the CD segment as part of the enhanced surveillance framework. Stocks are placed in the CD segment based on various criteria including illiquidity, circuit-hit frequency, infrequent trading, low market capitalisation, and regulatory or compliance concerns. The Trade-to-Trade (T2T) segment on BSE and NSE's equivalent segment operate on similar principles—each transaction must result in gross delivery.
The rationale for compulsory delivery is to deter speculative activity in vulnerable stocks. In a normal segment with netting, operators can run circular transactions—buying and selling between connected entities—to create artificial volume without ever delivering shares, since the net obligation is zero. The CD segment prevents this by requiring every single leg of every trade to be settled through actual securities movement.
For retail investors, encountering a CD stock carries significant practical implications. If an investor accidentally buys a CD stock intending to sell it intraday, the sale will still require them to deliver actual shares, meaning they need the shares in their demat account. If they cannot deliver, a short delivery auction penalty will apply. Brokerage platforms typically display a warning or prevent intraday product type selection for CD stocks.
Stocks can be moved into or out of the CD segment based on periodic exchange and SEBI reviews. A stock that has demonstrated improved liquidity, price stability, and compliance can be considered for reclassification into the normal rolling settlement segment.