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April 16, 2001
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Money > Business Headlines > Report April 16, 2001 |
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Major bourses divided over CNSP Vaidyanathan Iyer The major bourses are divided over the introduction of continuous net settlement in the stock exchanges as mooted by the Securities and Exchange Board of India in its meeting with officials of the bourses on Friday. CNS enables investors to extend delivery of shares preventing the market from sudden falls. According to sources, while the National Stock Exchange is ready to offer CNS, along with its automatic lending and borrowing mechanism, the Bombay Stock Exchange has expressed certain reservations about CNS having already in place the borrowing and lending of securities system. While Sebi is of the opinion that CNS is a better product to curb speculation in the market in the rolling settlement regime, brokers feel that the market will essentially turn into a cash market necessitating settlement of all transactions in the very same day. Sources said BSE officials felt that in the current depressed market scenario, any new product would only further add to the problems. "The T+1, T+2, T+3, T+4 and T+5 settlement mechanism as talked about by Sebi is redundant because BLESS takes care of the needs of rolling settlement," they added. Sebi has said that the current badla mechanism can be scrapped once the continuous net settlement system is fully in place. However, given the technology prevalent in the banks, it would prove to be too difficult a task for brokers to settle transactions daily in the absence of the badla. Delhi Stock Exchange officials said that it had decided in favour of implementing BSE's BLESS mechanism along with the rolling settlement system. While the Calcutta Stock Exchange was not represented in the Friday meeting called by Sebi to take stock of the bourses' preparedness to the rolling settlement starting July 1, all other stock exchanges have already decided on rolling settlement since the volume of trades are not very high. Sebi has also set up a committee to look into the suitability of CNS in exchanges which has amongst others JR Verma, director, Sebi, the executive director of BSE, the ED of DSE and M G Damani from CDSL. The next meeting of the committee is to be held within the next fortnight. Powered by ALSO READ:
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