The issue was discussed by the Sebi board following repeated queries by the finance ministry on the issue, but was adjourned after the market regulator pointed out that it was keen to have high levels of demat before the step was introduced and that it was taking all possible measures to ensure that this was done at the earliest.

Finance ministry sources have in fact pointed out that the ministry is keen that rolling settlements should be introduced within the next six months.

Interestingly, Sebi had only recently after a meeting with stock exchanges concluded that rolling settlements would have to wait. Sources had told The Financial Express that the market regulator would much rather give a thrust to demat trading before rolling settlements are introduced and that was the reason for Sebi coming out with its diktat to make demattrading manadtory from January 4 with respect to 10 securities.

This decision was taken in the same August 19 meeting with stock exchanges where the decision to drop rolling settlements for the time being was taken.Sources pointed out that the finance ministry had sent several missives to Sebi on the matter and hence it was felt that the matter should be discussed on the board, where the finance ministry is represented by the chief economic advisor, N Shankar Acharya.

At the meeting, a detailed presentation was made on the progress in dematerialisation especially the January 4 diktat by the regulator to ensure that trades with respect to 10 securities are only carried out in demat form post-January 4.

It was pointed out to the board, that this list of 10 would be extended expeditiously and once this is done there is no reason why rolling settlements could not be introduced. "We have maintained our stand that demat is a must before introduction of rolling settlements", said a Sebi source.

The financeministry has been for long keen that rolling settlements should be introduced in the market at the earliest as this would bring the markets on par with their international counterparts as also bring an end to excessive speculation in the market. With the progress made by the delivery especially the high percentage of demat delivery taking place in the physical segment, it was felt that the time might well be ripe for introduction of rolling settlements.

Following several missives from the finance ministry, Sebi convened a meeting with stock exchanges who were of the opinion that the existing infrastructure would not be able to handle the change. Stock exchanges with badla resisted the move on the grounds that badla would come to an end if rolling settlements come into effect.