Close on the heels of allowing a time gap of three months between connectivity with depositories and commencement of compulsory dematerialised trading, the Securities and Exchange Board of India (Sebi) has further relaxed the time limit for 140 companies seeking connection with depositories.
Sebi sources said the market watchdog has permitted these 140 companies, currently being traded in the "trade for trade" window of the stock exchanges, to get connectivity with depositories by November 27. The companies, by virtue of the three months' time gap between connectivity and transaction, will be traded in the compulsory demat form from February 26, 2001.
Netting of positions at the end of a settlement period, which is considered as one of the crucial advantages of carry forward mechanism, is not available in the "trade for trade" window of the stock exchanges.
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Sebi sources said the companies are, by and large, going slow to get them connected with the depositories and, therefore, the process of compulsory demat trading is getting delayed.
To start paperless trading, companies have to establish connection with two depositories -- National Securities Depository Ltd and Central Securities Depository Ltd.
The sources added that only 44 out of 202 companies who were supposed to get connected with depositories by October 30, have so far established connections. These, including Cimmco Birla, Infar (India) and Modern Dairies, will be traded compulsorily in demat from January 29. The rest 158 will be traded on "trade for trade" segment from the settlement period on or immediately after November 13.
These scrips, sources added, which have been shifted to the trade for trade window of the stock exchanges would be reverted back to the normal trading from the next cut off date after the depositories confirm to Sebi that the companies have established connectivity.
Sebi has given the stock exchanges the freedom to put up 150 scrips, in addition to those already announced by the market regulator, on the demat list by December 31.
Sebi sources said all these changes are aimed at ensuring a smooth transaction of paperless trading on the Indian bourses.