The Reversal Trade Cancellation Mechanism (RTCM) has been introduced by the National Stock Exchange (NSE) as part of its surveillance measures to ensure market integrity. This mechanism is designed to identify and cancel intraday reversal trades that may indicate abnormal or non-genuine transactions.

What is RTCM?

RTCM is a regulatory framework that monitors intraday transactions between the same parties (PAN-linked entities). If such trades are detected and classified as "reversal trades," the system automatically cancels them to prevent artificial volumes and price manipulation.

How RTCM Works?

• Trade Surveillance – The exchange monitors all trades for intraday reversal patterns between two Permanent Account Numbers (PANs).
• Cancellation Identification – If a trade meets the RTCM criteria, it is flagged and canceled.
• Broker Notification – Brokers are informed about the canceled trades, and necessary adjustments are made to client accounts.
• Client Notification – Clients are informed about the trade cancellation and impact on their accounts.
• Repeated RTCM violations : May face trading restrictions and disciplinary action by exchange 

Impact on your account

• Cancelled Trades: If your trade falls under RTCM, it will be nullified, and the corresponding funds/margins will be adjusted accordingly.
• Margin Adjustments: Any margin blocked for the cancelled trade will be released.
• Portfolio Impact: The reversal of trade may result in an unintended exposure in a trader's position.

What clients should Do?

• Avoid executing trades that create artificial volume through intraday buy/sell transactions within the same entity.
• Review trading strategies to comply with SEBI & NSE guidelines.
• Stay updated with notifications from the broker & exchange.

Frequently Asked Questions (FAQs)

1. Why was trade cancelled under RTCM?

Your trade was likely flagged as a reversal trade, meaning it involved a buy and sell transaction within the same PAN-linked entity on the same day, violating NSE’s surveillance norms.

2. Will I get my margin or funds back if my trade is cancelled?

Yes, any margin blocked for the cancelled trade will be released, and funds will be adjusted accordingly.

3. How can I avoid my trades being cancelled under RTCM?

To prevent cancellation, ensure that your trades are genuine, market-driven, and not structured to create artificial volumes.

4. Does RTCM apply to Derivatives segment ?

Yes, RTCM applies to Equity Derivatives segment as well.  

Additional Resources:

• NSE Circular on RTCM Implementation: NSE/SURV/62493
• NSE Circular on RTCM in Equity Derivatives Segment: NSE/SURV/65645
• NSE Circular on Symbol Shortlisting for February 2025: NSE/SURV/66264NSE/SURV/66264