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SEBI panel identifies 125 more scrips for demat trading, seeks to tighten norms

The working group on dematerilisation of securities constituted by the Securities and Exchange Board of India comprising representatives of foreign institutional investors, custodians, stock exchanges, mutual funds and National Securities Depository Limited has recommended a further list of 125 scrips for compulsory dematerialised trading by institutional investors.

The working group meeting held in Bombay today also reviewed the progress of dematerialisation of securities and trading in dematerialised securities.

While reviewing the progress of dematerialisation in these scrips and in others and also of dematerialised trading, the working group noted that there was satisfactory increase both in the quantity of scrips dematerialised and dematerialised delivery volumes.

The number of depository participants and the number of client accounts with the depository participants have also increased. According to data available from NSDL, the total value of shares dematerialised has grown by 18.5 per cent from around Rs 400 billion as on July 15, 1998 to Rs 474 billion as on September 23, 1998.

The regulatory board has announced a list of 110 scrips for compulsory dematerialised trading by institutional investors like FIIs, mutual funds, banks, overseas corporate bodies and financial institutions.

Of these 110 scrips, compulsory dematerialised trading has already began in 59 scrips. Compulsory dematerialised trading by institutional investors will commence from October 15, 1998.

Today's recommendation of adding further 125 scrips was accepted by the SEBI and it has been decided that dematerialised trading by institutional investors would be compulsory in these scrips from December 15, 1998. This would bring the total number of scrips available for compulsory dematerialised trading by institutional investors to 235 by that date.

The number of depository participants has increased to 65. These depository participants have began to offer their services to investors in 417 locations covering 126 cities. The growing geographical distribution of depository participants have been reflected in the rise in the client accounts (beneficial owner accounts) to 74,800 as on September 23, 1998.

The working group would be meeting on October 20, 1998 to consider adding further scrips to the list.

It was decided to consult with the stock exchanges for making it compulsory for brokers to rectify bad delivery shares only in dematerialised form and also to make it compulsory for the brokers who are having track record of introducing bad delivery shares to deliver shares only in dematerialised form for settlement.

Further, to give incentive for dematerialised delivery, the custodians can be asked to make prompt payment in respect of shares received by them fully in dematerialised form. It was also decided that delivery of dematerialised securities will be treated as good delivery for negotiated deals also.

Besides, the institutional investors should compulsorily settle trades executed as negotiated deal in dematerialised form in respect of securities which are announced by the SEBI from time to time for compulsory dematerialised trading by institutional investors, SEBI added.

UNI