``Based on this approval, both depositories have applied to MTNL for the connection," stated a joint release issued by the two depositories.

It may be recalled that regulation 31 of the Sebi (D & P) Regulations, 1996 requires that every depository shall maintain continous electronic means of communication with all its participants, issuers or issuers' agents as the case may be, clearing houses and clearing corporations of the stock exchanges and with other depositories. Interestingly, when CDSL was granted permission by Sebi to go live in March 1999, market experts had questioned the clearance in the absence of such a connectivity between the two depositories. Moreover, experts also believe that the connectivity should be established through V-Sats rather than I-Net. "The procedures for inter-depository transfers between CDSL and NSDL arising out of transactions settled through clearing house or clearing corporation are expected to be finalised separately," stated the release issued on April 26. According to CDSL officials, the move will provide an investor equal footing to trade either through NSDL or CDSL.

"In the absence of connectivity, those intermediates who wanted to settle deals through NSDL, however, had an account with a DP connected with CDSL, had to rematerialise their holdlings then dematerialise once again to enter into the arena of CDSL. This cumbersome process will be done away with," explained a senior official of NSDL. "The transfer of shares to and fro will also take place in a smooth manner," he added.