Uniform Settlement Pares InvestorsLeverage: Fise

The Federation of Indian Stock Exchanges (Fise) has opposed the uniform settlement system for stock exchanges as it will decrease the leverage available to investors who can now choose a bourse according to their requirements.

In its ninth meeting held under the auspices of the UP Stock Exchange, Kanpur, and attended by representative of 12 stock exchanges, Fise felt that the different settlement dates acts to reduce the volatility of the market, because of the facility to shift position from one market to another. According to it, the present time was not right for the introduction of a uniform settlement system.

 

Fise further unanimously agreed that arbitrage transactions that take place among the stock exchanges have the effect of evening out the fluctuations in the market.

Therefore, the suggestions to introduce the uniform settlement is not possible at least till the introduction of an active derivatives market by way of modified carryforward system along with futures and options. Fise is in favour of futures and options, Deepak Chowdhry, president, said, while talking to journalists. But it felt that it needed further study. Therefore it has appointed a sub-committee under PK Jain of UP Stock Exchange, to make an in-depth study of the proposal to introduce futures and options in the country. Meanwhile, in a move to overcome the problem of bad deliveries, Fise plans to recommend to Sebi that: On-line pre-verification facility relating to share certificate and transfer deeds must be made available by all listed companies having a share capital of Rs 25 crore and more before 1-4-1998; access to data base relating to stolen fake shares be made available to all bourses.

Also, the provisions embodied in the Companies Act, 1956, relating to the liability of companies for wrongful issue of duplicate share certificates be brought to the notice of the companies through Sebi and bourses and that these provisions be also made applicable to all the mutual funds and also to the Association of Mutual Funds of India.

The Fise meeting, in a bid to finally overcome all the problems related to bad deliveries, exhorted the companies to expedite the process of dematerialisation.Fise resolved that to ensure the safety of operations, the utility of having intra-day trading limit is questionable.

In fact, with the introduction of on-line monitoring of gross and net

exposure limits during trading and collection of mark to market margin on a daily basis, the restriction is unnecessary.

On the contrary, it severely affects the liquidity of operations. FISE will write to Sebi for correction on this.

It sought the creation of investor protection fund by the money which has been deposited with the government of India as unclaimed dividend. This quantum would be around Rs 100 crore, says Chowdhry.

Meanwhile the Fise membership has risen to 14 with the admission of 2 more stock exchanges "� Magadh and Jaipur.