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Parul Monga
Mumbai, Aug 9: Sebi has set the ball rolling for the introduction of rolling settlement in the country's stock exchanges. The target date for introduction will be sometime in the first week of December, 1999 and 10 scrips will be selected for the experiment. A working group has been set up to work out the modalities for the introduction of rolling settlement.
``We think this process should be gradual and should start with fewer scrips'', said Sebi chairman DR Mehta. The group will address questions on whether it should be for all investors or restricted only to the institutions initially, which scrips should be first put into rolling settlements, which exchanges among other issues.
At a meeting of the representatives of all the stock exchanges with the market regulator, Sebi also announced steps to clear the backlog of dematerialisation at a faster pace.
The survival of smaller stock exchanges came in for discussion at the meeting with suggestions for mergers or alliances with the larger stockexchanges.
``It was suggested that the existing infrastructure of the exchanges could be used for providing investor services, the exchanges acting as DPs for holding beneficiary accounts, using the exchange infrastructure of monitoring and surveillance on behalf of the larger exchanges'' said Sebi executive director Pratip Kar.
``The idea of mergers and alliances with the larger SEs was also mooted. The other suggestions included smaller SEs becoming subsdiaries of the larger ones; their subsdiaries becoming members of other exchanges; tranfer of base minimum capital of the regional stock exchanges to the Inter Connected Stock Exchange,'' said Mehta.
Expansion of the RSEs to centres which are outside the jurisdiction of the other stock excahnegs could be allowed without the prior permission of Sebi. ``This caused a lot of unnecessary delays'', said Mehta.
On the issue of Y2K compliance Kar said that all stock exchanges have to be Y2K compliant by November 30, 1999, failing which their operations willbe stopped from December 30, 1999. ``For brokers who are not Y2K compliant by November 30 their trading terminals will be switched off immediately and the SEs will reveal on thier web sites the names of such brokers'', said Kar.
Kar pointed out that December 30, 1999 will be the last trading day on which all settlements will end, regardless of the settlement cycles. ``On December 31 and on January 1, 2000, for two hours the stock exchanges will conduct mock trading and settlement sessions in which all exchanges including the connectivity to the depositories will be tested for Y2K compliance. The exchanges will prepare detailed contingency plans for themselves and the member brokers and submit the same to Sebi by the end of the month''. Accordingly the Y2K preparedness of all the Stock exchanges will be available on the Sebi website on September 1.
On the issue of negotiated deals the house was divided. Mehta said that 55 per cent of the members are in favour of abolishing negotiated deals especailly forscrips in dematerialised mode as the rationale for this segment is not there. ``Other 40 per cent of the house felt that negotiated deals should be there provided they are accompanied by delivery the next day. About 5 per cent of the members were of the view that as is prevalent in the US market these should be made known to the market and if there is a better offer that could be taken up. These suggestions will now go to the Shah committee on negotiated deals'', said Mehta
``With regard to margins it was dedided that for exchanges having a base minimum capital of Rs 2 lakhs, the exempted margin would be Rs 50,000 and for exchanges with BMC above Rs 2 lakhs the exempted margin would be Rs 1 lakh'', said Sebi senior executive director, LK Singhvi. ``This was done to reduce administrative hassels'', said Singhvi.
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.
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