Depository Set To Kick Off With 10 Scrips

The National Securities Depository (NSDL) will kick off operations with 10 scrips Siemens, HDFC, Reliance, L&T, Crisil, BPCL, ACC, Tisco and Hindustan Lever. ICICI will become the 10th scrip to be dematerialised with NSDL. However, according to C B Bhave, the final agreement is yet to be signed.

The earlier list announced by NSDL included the names of IDBI and SBI. However, the IDBI Act and SBI Act have to be amended for dematerialisation of their shares. According to Bhave, these two institutions will join after they get the requisite clearances.

"The operation will begin with 10 scrips and approximately 10 depository participants. SHCIL is already in the final stage while others like Citibank, Global Trust Bank, IIT Corporate Services are completing the formalities," Bhave said.

"It is difficult to predict how soon the depository will catch up with the market. It will take atleast two years to create the necessary impact on the market. It is necessary for the depository to tap members that are actively trading. Leading custodians also need to be tapped. It will take atleast 3 months for custodians to understand the functioning of the depository while their clients will take another 6 months to do the same. If they are able to get atleast 20 companies in one year it will be a commendable job," R Chandrasekharan, managing director, SHCIL, said. SHCIL is the first depository participant to have reached the 'production' stage. Its client list includes institutions like UTI, LIC, GIC and Morgan Stanley. UTI chief general manager, B G Daga, incharge of the secondary market operations, also has great expectations from the new depository. However, UTI , which is also one of the promoting institutions in the depository, is not planning to completely dematerialise portfolios of its scheme. It will initially take up those scrips promoters of whom have committed for dematerialisation.

Foreign institutional investors are bullish on the launch of the depository, but say the move would not have an immediate impact. According to sources at UK-based investment bank Kleinwort Benson, the clean-up job needs to be done at the stock exchange end, as the depository would address the limited set of problems relating to transfer delays, stolen or fake shares.

Credit Lyonnais Securities (Asia) managing director, Michael A McCoy, said the setting up of the depository remains the one significant step for FIIs.