SEBI to widen demat, rolling settlement lists

Retail investors can trade in 200 shares in the demat segment while institutional investors can trade in 500. Mehta refused to say how many shares will be introduced in the rolling settlement or the dematerialised lists. There are about 9,800 scrips listed on Indian stock exchanges, he said.

Mehta said that some of the scrips, which would be put on the compulsory paperless trading, would later be placed on the rolling settlement. Only scrips that are on the demat format are eligible for rolling settlement, so it was necessary to put the scrips on compulsory demat trading before making it eligible for rolling settlement, he said.

Mehta said out of the 10 scrips put on rolling settlement, the volume of transactions in eight have fallen while in two scrips the trading volume improved. "It’s wrong to assume that the trading volume fell drastically in all scrips that were put on rolling settlement," he said adding that Sebi would increase the scrips on rolling format from time to time.

The SEBI chairman ruled out the possibility of reducing trading margins on certain scrips. "The rationale (for the margins) is that we are all scared of the market. In this kind of high volatility, we cannot take a relook at it now," he said in reply to a question on high margins imposed on certain scrips, especially finance and information technology companies. "So, if you ask me to reduce margin, I am not going to."

The Bombay Stock Exchange (BSE) on January 3 increased the special margin on 189 select scrips to 50 per cent, after a SEBI directive to exchanges asking them to take measures like imposition of additional margins in case of share volatility.

The special margin was in addition to the daily margins and additional volatility margins that a scrip may attract. The 30-share BSE sensitive index has been rising sharply since early-November 1999. It closed at 5,335.80 points, 25 per cent up from the November 1, 1999 close of 4270.74.

Stating that the regulator was also keen to see an active secondary market for debt instruments, Mehta said SEBI has convened a meeting along with Reserve Bank of India (RBI) on January 31 to find ways to activate the debt market.

On the future SEBI agenda, he said corporate governance, venture capital investments, derivatives trading and rolling settlement formed the regulator’s future agenda. He said Sebi would allow derivatives trading to start once it receives a formal notification from the Centre. "The government has received the Parliamentary approval for derivatives trading. We are now waiting for a formal letter from the government," Mehta said.

On the mutual funds sector, Mehta said that the sector was competing with foreign institutional investors and the total assets of the funds was set to cross Rs one lakh crore by this fiscal end.