The ISE proposes to minimise the risk and the duration of getting the shares dematerialised for the buyer and thus provide value-added services to the participants of the exchange.

According to ISE managing director Joseph Massey, "The seller does not get an optimum price due to the risk and delay in dematerialisation of shares faced by the buyer when the shares are sent for demat from the physical mode. Although both BSE and NSE have a window for the same, the onus is on the buyer to get the shares demat so the buyer takes the marginal risk of the delivery going bad and secondly, the buyer has to wait for 3-4 weeks before the stock is dematerialsed. During this wait period, there is an interest cost also involved".

Massey said that if Sebi grants permission, theexchange would be getting the shares dematerialised for the buyer. ISE proposes that the issue of the intervening period when the shares go for demat is being addressed by the exchange by proposing to Sebi to increase the pay-out period to include the time span that the corporates take for giving the demat shares back to the exchange.

Currently, the pay-out is done seven days after the the settlement cycle is over. ISE is also taking up the matter with various corporates and asking them to reduce the period in which their registrar and transfer agents get the shares dematerialised.

"This facility would help retail investors save on the time he will spend in getting shares dematerialsed and secondly, with institutional participation, the risk in the market would also be minimised. Therefore, more investors would be drawn into the system to utilise the segment. It is more applicable for investors in the small regional centres, as such investors have to deal with companies or their registrar and transferagents who may be located in metro centres. In the physical to demat segment, the price differential exists between the two segments will also narrow down," Massey added.