MUMBAI, February 23: In a bid to decentralise its structure, the National Stock Exchange (NSE) has decided to further empower its committee on settlement issues (Cosi) by routing all the procedural aspects of settlements through this 25-member, broker-dominated body.The move comes even as a section of the market is drumming up support for giving a greater representation to brokers in the decision-making process of the NSE.
It may be recalled that in the wake of the indemnity-bond controversy, the exchange authorities had decided that they would step up the involvement of the brokers in the decision-making process and also take them into confidence on various issues.
Empowering the Cosi seems to be the right solution to the problem as this body comprises brokers and three custodians.
As a first step, the disputes resolution committees which comprise Cosi members, have been empowered to settle disputes between members pertaining to company objections and auctions at the regional clearing house level,if both the delivering and clearing member are part of the same regional clearing house.
Interestingly, in the recent past, the exchange authorities kept themselves distanced from Cosi's decision to recommend the delivery of demat shares in the physical segment as well.
The Cosi directly took up the matter with the National Securities Depository Ltd (NSDL) which in turn wrote to stock exchanges and SEBI.
When contacted, NSE managing director RH Patil admitted that the exchange has embarked on a move to decentralise power and empower the Cosi as a part of the strategy.
"In the early stages of formation of NSE, the idea was to create an atmosphere that market efficiency is important. Towards doing this the exchange wanted to enforce discipline. Now that the rules are in place we would like the brokers to play a more pro-active role in the implementation of these," said Patil.
"All further refinements to the rules pertaining to settlement issues which in turn affect trade-related issues would be routedthrough Cosi.
`'We get a number of suggestions from market participants and investors. As brokers know exactly where the shoe pinches, we have decided to get them to take decisions on these issues," said Patil.
"We expect a lot of settlement-related problems to end when demat trading becomes the order of the day. But, in that too, Cosi has already taken a lead by coming out with its recommendations to NSDL," said Patil.
"In fact, towards decentralisation we have also decided to hand over the entire task of building our new premises at the Bandra-Kurla complex to the premises committee which comprises professionals." "They have taken each and every decision on the Rs 50-60 crore project till now," said Patil.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
