A decision on this will be taken only after inter-connectivity is established between the two depositories - Central Depository Services Ltd (CDSL) and National Securities Depositories (NSDL). With a huge backlog of demat shares pending with registrars, Sebi is going slow on the expansion of the demat list. The inter-connectivity between the two depositories is expected to be established by August 7.

The Sebi chairman also said that the introduction of rolling settlement on the exchanges will be possible only after derivatives trading takes off. This implies that the rolling settlement will be introduced only in the last quarter of the current financial year. The derivatives bill has to bepassed by the Parliament. The process could take about four to six months after the new government settles for business.

The introduction of rolling settlement will virtually mean a cash market leaving no scope for hedging. Sebi, therefore, is keen on the introduction of derivatives trading as a precursor to rolling settlement. Besides, BSE does not have the necessary infrastructure to meet the requirement of rolling settlement system. ``However, rolling settlement is high on the agenda of Sebi,'' said Mehta.

On the action being taken against vanishing companies he pointed out that investors have put in money notwithstanding the disclosures made in the prospectuses of the issues. For instance, in the case of Aqua Dev India Limited which raised Rs 3.55 crore, it was mentioned in the risk factor that the company had no sanction for loans and power, no tie-up for exports, a pending civil case against the promoter besides a number of other negatives. In another case, Vipul Securities the prospectushighlighted that the company would not be paying dividend for two years and that it had defaulted in observing prudential norms.

Yet investors went ahead and invested in such companies. Given these kind of disclosures, it is not possible to take action against merchant bankers and lead managers, Mehta added.