Custodians who had rushed in with demat requests following the expansion of the compulsory demat trading list by SEBI had been forced to put up with arbitrary rejection of some requests by registrars. The problem had occurred due to concerns among some registrars about shares which faced legal disputes. They feared that such shares may get embroiled inlitigation which might lead to complications later. In other cases, there were apparently disputes regarding ownership which were yet to be resolved. "What if there is a stay on the transfer of these shares at a later point of time. We have to be very careful", said a registrar source.

The grievance of the custodians was that the reason for rejection should be conveyed to them so that they know exactly what the problem is.

For an investor to dematerialise a share, the shares must be in his name and not in street names. Therefore, the shares are first transferred in a person's name (if they are in street names) and then dematerialised. "There are an estimated 270 crore shares owned by institutions in the 50 securities where they are to trade only in demat shares. Of these, about 140-150 crore shares have already been dematerialised. ``There is, therefore, immense pressure on registrars to keep pace with the demat requests. It is imperative that custodians and registrars work together in achieving highlevels of dematerialisation in the Indian markets", said a Sebi source.