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Journalism of Courage
MUMBAI, AUG 9: India will be moving towards compulsory rolling settlement by the end of the year. The Securities and Exchange Board of India SEBI today decided to commence compulsory rolling settlement daily settlement instead on a weekly basis in ten scrips with effect from the first week of December.
At the annual meeting of stock exchanges here today, it was felt that the move towards rolling settlement should be gradual and in a phased manner. SEBI chairman D R Mehta said a group has been set up to suggest the scrips for rolling settlement and whether it would be applicable for all exchanges or only those connected to a depository or made mandatory only for institutional players.
The group, comprising members of the exchanges of Mumbai, Delhi, Chennai, Ahmedabad, Calcutta, Ludhiana, National Stock Exchange and Inter-connected SE, is expected to work out the modalities and finalise the report within a month.
The meeting also discussed Y2K preparedness and decided that operations would be stopped from January 2, 2000 on all those SEs that are not Y2K compliant by November 30, 1999. It was also decided that terminals of brokers would be switched off with immediate effect if they are not compliant by November 30, while December 30 has been set as the last trading day for all exchanges irrespective of their settlement cycles.
The stock exchanges have been asked to conduct mock trading and settlement sessions on January 1, 2000, for two hours. The exchanges will prepare a detailed contingency plan for themselves and the member brokers and forward it to SEBI by the end of the month. The Y2K preparedness status of all market intermediaries would be disclosed on SEBI website on September 1, 1999.
Mehta said 8220;the members expressed concern over the lack of availability of depository participant infrastructure facilities even in important cities and towns like Amritsar and Patiala. While some of these cities have DPs, many centres are not connected to the National Securities Depository Ltd which results in delays and hardships.8221;
In view of the recent surge in demat request and a backlog, SEBI has decided that henceforth it will put up on the SEBI website information regarding pending demat requests with the DPs, registrars and depositories. Also, the names of such entities where there are inordinate delays will be published by the SEBI.
One of the suggestions to meet the problem was that the clearing houses of stock exchanges may be registered as a DP not only for clearing of settlement of securities but also for providing facility to the investors for opening beneficiary accounts. It was agreed that wherever the clearing function is performed by an entity other then the stock exchange like a bank or a clearing corporation, such an entity could be given the DP registration even for opening beneficiary accounts of investors.
SEBI has also constituted a committee comprising of DPs, registrars and share transfer agents, the BSE and NSE to look into the standardisation of various procedures and formats for DP operations and issues relating to delays and systemic improvement as well as safety aspects.
The meeting discussed the problem of survival of smaller stock exchanges which at present are languishing without any or with very little business. On the issue of the survival of the smaller stock exchanges, mergers and alliances of the smaller stock exchnges with the larger ones was suggested. In view of the large geographical spread of the country SEBI feels that there is a need for smaller stock exchanges to cater to the investor population spread across the country. However, SEBI8217;s role in this regard is limited to providing an enabling mechanism, especially to ensure the financial viability of the exchanges and business opportunities of the brokers and exchanges.
It was also agreed that expansion of the regional exchanges to centres which are outside the municipal jurisdiction of the other exchanges could be allowed without prior permission of SEBI, subject to compliance with the existing requirements. To look into all the above aspects, it was decided to form a group comprising of members of the smaller stock exchanges and BSE, NSE and CSE.
