Interconnectivity between depositories by Aug

If in the opinion of the committee, some charges are to be levied for any inter-depository transfer, this would be paid by the depositories.

Meanwhile, the two depositories have been asked to follow the settlement model earlier agreed by them, which envisages that settlement of market transactions would be started by asking the clearing house or corporation effecting the same pay-out of shares of each depository as a pay-in of shares in that depository.

However, CDSL would later be free to adopt the alternate mode suggested by BSE8217;s clearing house which envisages on-market inter-depository settlement based on the instructions of clearing house to the depositories and subsequent transmission of information to the registrar and share transfer agent.

President of the Bombay Stock Exchange BSE Anand Rathi said CDSL would commence participation with the clearing house from the next settlement beginning on July 12.

Mehta stressed the need for establishing early inter-connectivity between the two depositories because of requirements of competition and speedier expansion of the depository infrastructure in the country.

He felt that while depositories should be adequately compensated for services rendered, the interest of investors should be paramount.

Meanwhile, the G P Gupta committee on market making, for illiquid securities is expected to finalise and circulate its recommendations next week.

The committee, which was set up two years ago, has recommended that the Reserve Bank of India RBI encourages banks to extend credit to market makers.

Gupta said, the exchanges would need to pursuade their clearing banks to open special cells for lending to market makers. The market maker would be required to indicate his choice of scrips for market making and would be liable for de-registration on his failure to do so.