Dse Demat Trade From Aug 17

Delhi Stock Exchange has decided to kick off trading in dematerialised shares on August 17, 1998, according to DSE executive director S S Sodhi.

The decision comes in the wake of the bourse joining the National Securities Depository Ltd.

DSE had been weighing the options of joining either NSDL or the depository being promoted by the Bombay Stock Exchange. However, the balance tilted in favour of National Securities Depository Ltd on account of the inordinate delay in setting up of BSE's depository.

With the arrival of dematerialised trading on DSE, there will be rolling settlement in the segment on the T+5 basis. This implies that a trade will be settled on the fifth day of its execution.

 

Thus, the securities to the buyers and funds to the sellers will be available much earlier than under the current practice.

Dematerialised trading will also eliminate the risk of bad delivery, which is a feature of physical trading, and enable traders to save on time and courier charges incurred on physical transfer.

It will also reduce the cost of trading since, under the Depository Act, trading in dematerialised equity instruments is exempt from payment of stamp duty.

Transfer of dematerialised shares is instant and insured by the depository against bad delivery.

Transfer of physical shares can take up to two months, as they are sometimes sent to the issuing company for objection.

Dematerialised trading is said to have picked up rapidly in recent months, with the total volume in dematerialised settlement touching Rs 1,000 crore a month.

NSDL has dematerialised shares with a face value of over Rs 20,000 crore, constituting 50 per cent of the total market capitalisation of the Indian stock market.

As many as 167 companies with a market capitalisation of Rs 2,48,000 crore have been converted into demat form.

Out of these, 154 are eligible for trading at National Stock Exchange as well as Bombay Stock Exchange.

The number of depository participants has reached 49, spread over 10 cities, offering services at over 214 locations in the country.

The total number of accounts open with the depository participants has gone up to 10,614.

Five banks -- Times Bank, HDFC Bank, Global Trust Bank, IndusInd Bank and Bank of India -- have reduced the rate of interest on advances against dematerialised securities.

Besides, the Reserve Bank has raised the ceiling on such loans to Rs 20 lakh, while the minimum margin has been reduced to 25 per cent.

The margin on advances against physical securities is a whopping 50 per cent.