The NSDL chief, CB Bhave is believed to have told top BSE officials that dematerialising shares which are not registered in the actual owners name or are in street names, could pose a major risk to the safety of the system and hence can't be allowed.

He has, however, informed the BSE top brass that the depository would support any other initiative which would lead to quick dematerialisation of the shares lying with BoI Shareholding, the clearing house of BSE.

Bhave has asked the exchange to come up with suggestions and is currently awaiting a word from them, said sources.

The BSE request to NSDL has come in the wake of problems in the clearing house pertaining to the physical shares. While several shares are believed to have been lost there is a fear that a large amount of these shares which weredeposited on account of "book bandh vyaj badla", could have been stolen by some vested interests.

According to market sources, the shares which had been deposited in the clearing house during the first week of April, when the no-delivery season had kicked off had been misplaced.

Given the fact that the no-delivery season has reached its fag end, brokers have become restless since they have to settle their accounts.

The developments have led to inquiries being initiated by BSE, Bank of India as well as the market regulator, SEBI.

As dematerialisation is the only solution to the problem, BSE has approached NSDL to work out a mechanism wherein all the vyaj badla shares could be dematerialised as soon as possible.

The merits of dematerialisation have been well understood by the exchange. The exchange has therefore accorded second preference to vyaj badla shares from the kitty of demat shares that come in for delivery in the physical segment.

Initially, BSE had thought of dematerialising the entirechunk of vyaj badla shares in one go. It then realised that by replacing all the physical shares by demat shares settlement wise may be a better idea.

A large number of demat shares have already moved to the clearing house since April 6, when demat shares were allowed to be delivered in the physical mode.

The recent developments at the clearing house have, however, led to a rethink on the part of the exchange authorities, leading to a request to allow dematerialisation of shares in street names.

BSE sources confirmed that there was a sense of urgency in the exchange to overcome the problems at the clearing house.