The exchange identifies defaulted deliveries on T+1 evening On T+2, it conducts an auction session to buy the same quantity from the market The shares are then delivered to the…

Auction happens if: A trader sells shares they don’t actually own or can’t deliver on T+1, and The broker fails to fulfill the delivery obligation

An auction in the stock market is a penalty process conducted by the exchange when a seller fails to deliver the shares after selling them. The exchange buys those shares…