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Sebi panel to pore over deferral products

BS Markets Bureau

The Securities and Exchange Board of India today appointed a committee to look into deferral products to be introduced in the stock exchanges in addition to continuous net settlement. The group, chaired by full-time member of Sebi board J R Varma, would submit its report by the first week of May, 2001.

A meeting of the stock exchanges was convened to ascertain the preparedness of the bourses for the implementation of the rolling settlement in scrips under ALBM, BLESS and MCFS by July 02, 2001. The representatives of the 12 stock exchanges were present during the meeting.

BSE, NSE, DSE, CSE, BgSE, LSE and HySE already have the rolling settlement in place. Other stock exchanges like Rajkot, OTCEI, ICSE and MSE are ready with the trading and settlement software as well as monitoring and surveillance system and margins systems.

A few of the stock exchanges do not have direct electronic connectivity between the clearing-house and the clearing-banks. However, they indicated the connectivity will be in place before the scheduled date.

Most of the stock exchanges said they were connected to both the depositories, NSDL and CDSL, directly or indirectly. Those bourses which have connectivity with only one depository and will be able to establish connectivity with the other by May 2001.

With regard to the introduction of deferral products in the rolling settlement such as the Carry Forward under Rolling Settlement, Automated Lending and Borrowing under Rolling Settlement, Borrowing and Lending of Securities Scheme or the Continuous Net Settlement, some of the exchanges stated that they would introduce the rolling settlement without any of the deferral products. Others said that they would like to have either CNS or ALBM or both.

All the scrips included in the ALBM, BLESS or MCFS in stock exchanges will be traded only in the compulsory rolling settlement on a nationwide basis, i.e. on all the stock exchanges from July 2.

In addition, if there is any scrip which is included in the BSE-200 list, but not covered by the above list, would also be included in the compulsory rolling settlement on a nationwide basis.

The bourses will, therefore, have to develop software (if necessary) before that date. In case, any exchange does not have suitable infrastructure for the above purpose, they will have to create such infrastructure by that date, if the stock exchange wants the scrips to be traded on their exchanges other than on spot basis.

The other members in the committee are Pratip Kar, executive director, Sebi, A N Joshi executive director, BSE, Ravi Narain, managing director, NSE, C B Bhave, managing director, NSDL, M G Damani, managing director, CDSL, P K Singhal, managing director, DSE and K Kamala, executive director, BgSE.

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