Demat Deadline For 10 Scrips

The Securities and Exchange Board of India has made it mandatory for settlements of trades in 10 securities in the dematerialised form with effect from January 4, 1999.

The securities are SBI, ICICI, HDFC, L&T, BPCL, Infosys, IDBI, BSES, BOI and IndusInd Bank. The decision will be applicable to all category of investors.

While an investor has the option to hold securities in physical form, the settlement of all trades must be in demat form.

The decision was taken at a meeting of heads of stock exchanges and the National Securities Depository Ltd yesterday. Those who attended the meeting included the chiefs of the BSE, the NSE, and the Delhi, Calcutta, Ahmedabad, Madras and Ludhiana bourses.

 

The meeting reviewed the progress of dematerialisation in the country. According to Sebi chairman D R Mehta, a decision was taken to extend the benefit of dematerialisation to small investors.

"Demat trading was found to eliminate the risk of bad deliveries, fake and forged shares and delays in transfers," he said.

The decision to have compulsory settlement of trades in demat form will be applicable to all stock exchanges. However, initially it will become effective only for those exchanges which are connected with the depository.

The issue of rolling settlement in physical segment was also discussed in the meeting. Mehta said that most exchanges opposed such a move. "Exchanges complained that the existing infrastructure of stock exchanges, banking and postal services were not able to cope with the revised system of rolling settlement in physical segment. Exchanges were not keen to have it in the physical segment. Instead, they suggested that rolling settlement should be introduced in a phased manner after complete demat trades are ensured in the first list of stocks," Mehta said.

Mehta also stated that in some of the securities in which Sbi had made settlement in demat compulsory for institutional investors, the delivery figures as percentage to total delivery were in the region of 90 per cent. "In a few scrips, it was above 95 per cent," the Sebi chairman said. He added that by December 31, 1998, more than 250-300 companies will have institutional investors settling trades in demat form.

Meanwhile, stock exchanges also recommended yesterday that any issuer seeking listing on bourses connected to the depository will mandatorily allot securities in the demat form. The proposal also says that allottees should have the right to seek rematerialised securities from the issuer on a subsequent date. Sebi is examining the proposal, the Sebi release said.