Sujoy Manna

Mumbai, April 16: THE National Stock Exchange (NSE) is all set to launch the continuous net settlement (CNS) by the end of this month. The CNS which was supposed to have been launched last month got delayed due to the capital market crisis. Sources at the NSE said that the infrastructure is ready and that they were planning to launch the product by the month-end.

It can be mentioned that the Securities and Exchange Board of India (Sebi) had held discussions with stock exchanges to examine whether stocks on rolling settlements should have any other deferral products apart from CNS.

Sources said that Sebi has set up a committee to review whether the existing deferral products like ALBM for multiple tenures or BLESS in the rolling mode should be continued at all and if continued, then in what form.
The committee will also consider whether CNS would be made compulsory. At present, apart from NSE and the BSE, most of the other exchanges do not have requisite infrastructure to start CNS. Sebi is likely to come out with the report in May.

NSE had introduced ALBM for rolling settlements for multiple loan tenures ranging from 1 to 5 working days. For this purpose, the ALBM session for rolling settlement is held on day T+1 and the lending is effected along with rolling settlement of day T on T+5 day. The capital market regulator has to consider whether ALBM for rolling mode will be continued in the present form.

CNS is essentially a post settlement process which enables the seller, who cannot deliver securities, to postpone the settlement. It is primarily a tool for imparting flexibility to the seller and avoiding painful auctions.