NEW DELHI, JUNE 23: National Securities and Depository Ltd (NSDL) has plans to make depositories play a more important role in the capital markets rather than serve as a mere repository of dematerialised shares.NSDL managing director CB Bhave said that they had presented a paper to the Securities and Exchange Board of India (Sebi) and the Reserve Bank of India (RBI) outlining a scheme whereby primary settlements can be directly routed through the depositories.At present banks are the main intermediaries in all issues made to the public or anyone else while the rest of the work is taken up by registrars and transfer agents among others.Bhave, who was addressing a IBM-sponsored conference on strategies for a converging world, talked about a seamless connectivity between banks (who are also depository participants), depositories and stock exchanges to facilitate the easier and faster handling of primary issues. "We have submitted a paper to Sebi and RBI," he said, adding that he expected some decision on this soon.At present clients are not able to give instructions to depository participants in the electronic way. "From B2B it is necessary to go to a B2C paradigm," he said, adding that Internet would be the only way for this connectivity.NSDL has also submitted a scheme to Sebi on straight through processing (STP) in terms of data base. Explaining the importance of connectivity, Bhave said that once a broker was registered with an exchange, this data (along with all subsequent transactions details) should be made available to all market intermediaries. He observed that it made no sense for any broker or investor to have to provide data every time they interacted with a market intermediary.This sort of STP would be possible only when all the intermediaries in the financial sector were connected and could have access to a network of servers where the information could be freely available. Internet was one way of establishing this connectivity as opposed to the existing method of employing very small aperture terminals (VSATs), he said.DEMAT DELAY: Sebi, in its endeavour to push through dematerialisation and pull up companies who were found to be slacking in this respect, held a meeting on Friday of 20 companies which have a long pendency of processing of demat requests.According to Sebi, the companies have assured that by the end of this month, all dematerialisation requests pending more than 21 days will be cleared. The issue of pendency of dematerialisation request of investors has been engaging Sebi's attention as such delays cause liquidity loss and hardship to the investors.Sebi has also been requesting the depositories to send the list of companies, which have been delaying the processing of demat requests beyond 21 days. In case the date set by the companies is not adhered to, then Sebi would be taking appropriate action under the appropriate Acts, even going to the extent of suspending their trading. At a meeting in April, around 25 companies were called by Sebi for delaying transfer of demat scrips.Sebi would also be issuing show cause notices to companies, which failed to attend today's meeting. Sometime back Sebi had held a similar meeting of companies who had assured that they would dispose of the pendency of dematerialisation request by May 3, 2000 and this has been complied with. Sebi would be holding similar meeting of companies in the future.From May 8, 179 companies were supposed to go into compulsory demat, but more than 60 of them communicated their inability to do it, as they had not signed up with either depository. From June 26 another 140 scrips will go into compulsory demat for all investors. At present there are 260 scrips under compulsory demat. By the end of the current year, Sebi expects to have covered nearly 98 per cent of the market.
