The list is expected to be much longer than the one prescribed by the Securities and Exchange Board of India (SEBI), whose move on mandatory demat trading in 10 securities from January 1999 onwards has come as a shot in the arm for these brokers.

Geojit Securities, south-India's largest broking house has taken the first step and has already written to its 10,000-odd clients that they should be prepared for trading only in demat shares with regard to several scrips and not just the 10 prescribed by SEBI.

According to depository sources, the initial response to the SEBI directive seems to be encouraging with the first investor awareness seminar by the National Securities Depository Ltd (NSDL) post-August 19 at Rajkot last Saturday, witnessing queries from investors on why the list for mandatory demat trading did not include more securities.

The response from the investors has been more than encouraging with DPs spoken to by The Financial Express saying that they are finding the rush a little too hot to handle.

"Now that the market has received the signal that demat trading is a reality, brokers who have so far resisted switching to only demat trading for fear of losing out on physical business, should now not hesitate to tell their clients that they would only trade in demat shares. Thus, there is a possibility that brokers might well come out with their own list of compulsory demat trading, ahead of the regulator coming out with its nxet list", said CB Bhave, NSDL managing director.

"We have decided to start off with 20-25 securities from January onwards. Our only hitch is that the Cochin Stock Exchange, where a lot of our investors do arbitrage on, is not part of the depository yet. This would of course change by January. We have already cautioned our clients on our plan to expand the list", said Geojit Securities managing director, CJ George.

"Brokers are telling us that they were only waiting for the system to be well accepted. Now that the signal has been received they say that they would restrict trading only to demat shares", said a source at Global Trust Bank, a leading DP servicing about 5,000 investor accounts.

The source pointed out that the bank never anticipated such a rush from investors and is hence trying to put its operations on road at various branches, at a feverish pace.

"Expanding the list at our prerogative is a possibility. The SEBI diktat has set the stage for greater dematerialisation and in due course of time as this picks up we could expand the list faster", said a source at UTI Securities.

According to Narayan SA, executive director and chief operating officer, the mandatory demat trading directive will prompt Kotak to move in to retail business in a big way.

"We have restricted ourselves to very few clients. We are now putting in place a sub-broker network to bring within our fold a large number of retail clients. For these clients we will trade only in demat shares or sell only those physical shares of their's which were bought through us. We are very clear that the depository business is going to herald our growth on the retail side by attracting more and more investors. We plan to expand to about 25 centres over the next couple of years", he said.

Bhave said that with the fear of bad paper out of the system, brokers would no longer keep clients at bay for fear of introducing bad paper through unknown clients. "Brokers will now take responsibility for their clients while sub-brokers will be able to perform their true role now that of marketing for the broker and not being the shield for him", he said.