MUMBAI, APR 11: The Securities and Exchange Board of India (SEBI) has slashed the no-delivery period and book closure notice period for shares mandated for compulsory dematerialised trading.The decision was taken in the wake of increased dematerialised trading and the reduction in paper work, SEBI sources said.The no-delivery period - the period before book closure during which trades in shares do not result in delivery - has been cut from four weeks to about two weeks, while the book closure notice period has been slashed to 30 days from 42 days, with immediate effect, sources said."The increase in dematerialised trading has reduced the work load of clearing houses making it possible for reduction in book closure period," SEBI executive director Pradeep Kar said here yesterday.The market regulator has asked stock exchanges to amend their listing agreement so as to bring to effect the change in book closure period."This move is definitely in the interest of the investor and market as the bookclosure period remaining shorter, results in increased liquidity," he added.Meanwhile, SEBI has placed its earlier decision to allow public issues to be made only in demat form on the backburner. This has come even after the SEBI board cleared such a proposal more than six months back and the regulator set an internal deadline of November, 1998, from when all fresh equity was to have been issued only in dematerialised form to prevent further creation of paper in the capital markets.Highly placed SEBI sources said that at a recent meeting of the committee on making public issues through the secondary market route, SEBI officials pressed for allowing issue of shares in paper form as well. The move was resisted by some stock exchanges who contended that the use of a stock exchange infrastructure should be restricted to demat shares as handling paper would not be possible.SEBI officials, however did not relent. SEBI sources said that the matter was even discussed at the primary market advisory committeewhich was sought to be convinced about the time not being ripe yet to move the primary market to a mandatory demat mode.Senior SEBI executive director O P Gahrotra in charge of primary markets was not available for comment as he is out of town and slated to be back only by April 15.What is intriguing is the manner in which SEBI has handled the entire issue. The SEBI board around September last year took the decision to allow all fresh issuances only in demat mode. It was announced that a certain date would be worked out after consultation with market players. SEBI officials at that point of time told The Indian Express that the date should be sometime in November.Then a series of meetings were held with various market players like registrars, merchant bankers and brokers. Everyone was in agreement with the reform.The SEBI executive director in charge of primary markets at that point of time was Vijay Ranjan and just when he was close to finalising the guidelines he was transferred and thecharge of primary markets was handed over to Gahrotra.In the meantime, SEBI also made considerable headway in creating the module where primary market issuance could take place through the trading and clearing systems of stock exchanges. The idea was to cut down the time and cost to investor on public issue allotment and the clearing house was sought to be the collection centre for shares requests and cash as well. It was presumed that the allotment would be only in demat form which would drastically lower the load on the clearing house.SEBI, however, stunned the committee when it met recently by saying that the issuance would be in paper form as well.
