SEBI chairman DR Mehta agreed to provide the schedule to finance secretary Vijay Kelkar when the duo met at North Block earlier this month.

SEBI is expected to set up a special group to work out the road map for across-the-board introduction of rolling settlements. No time frame, however, was promised by Mehta to the finance ministry mandarins. He will wait for the group to finalise the scheduling.

The ministry has been pushing for full-scale introduction of rolling settlements for over a year now as it feels that the present system was opaque and subject to manipulation. "It is not known what the operators are up to for five whole days of the week. At the end of this period, the position is netted out and deals are made," a ministry official said.

Though the ministry had been pushing for rollingsettlements, Mehta claimed that the Indian markets were not ready yet for a full introduction. Rolling settlements have now come to cover dematerialised shares.

The markets regulator had expressed fear that rolling settlements would mean the elimination of "badla" from the market system and this can cause damage to volumes and sentiment. Unless adequate alternative hedging mechanisms are available, the regulator is against wholesale introduction of rolling settlements.

The finance ministry, on the other hand, is of the view that taking one trading day at a time and treating it differently will not lead to the death of "badla" financing. In fact, at the time of settlement under the rolling system, a deal can be "carried through" to the next settlement and "badla" financing can plug the hole.

SEBI had also said that supplementary systems surrounding stock exchange deals are not geared up for a smooth transition to the rolling system mechanism. Banks are not in a position to deliver under the T+three(trading day plus three trading sessions) system being advocated by the ministry. Nor is physical delivery of shares possible within the suggested time frame. Such transactions are only feasible under a dematerialised regime.

The ministry feels otherwise. It claims that what is necessary is to bring transparency into the trading system and for this the adoption of the T+3 system is not required. What is needed is to make one day's trading transactions independent of the next. The settlement period can be extended if the requisite infrastucture is not available.