Sebi Takes Steps To Shore Up Demat Liquidity

The Securities and Exchange Board of India (Sebi) has allowed institutions to sell securities in dematerialised form in the physical segments of the BSE and NSE. However, the Sebi working group, which met yesterday, decided to continue with the T+5 settlement in the depository segment. Deli-very in the physical segment could also be in the demat form, with effect from April 6, 1998.

According to Sebi, the measures are aimed at mitigating the immediate problem of liquidity in the demat segment. Demat securities should be treated as good delivery in the physical segment of the BSE and the NSE. on both the BSE and NSE. It would mean that delivery in the physical segment could also be given in dematerialised form. This would help integrate the order book in physical and dematerialised segments, a press statement said.

 

Market players welcomed Sebis latest move. It is a move in the right direction. However, the impact of this move will be felt slowly. The market regulator should clarify how the possible mismatch between the various settlement cycles can be avoided, said Gul Tekchandani, chief investment officer with Sun F&C Asset Management. Market sources added that retail clients would now be forced to open accounts with depository participants (DP).

This was the first meeting of the working group after the mandatory demat trade in eight specified scrips came into effect last month. The group reviewed the progress of trading in the demat segment. As per the latest data, 57.13 per cent of the holdings of institutional investors in the eight specified scrips in the custody of the custodians had been dematerialised up to January 15, 1998.