BSE has worked out an effective method of dematerialising all the vyaj badla shares held by the clearing house. Rather than getting all these shares valued at over Rs 500 crore dematerialised in one go, the exchange has decided to do this in phases.

Of all the dematerialised shares received by the exchange at the pay in, it has been decided to give first preference to institutional investors.

Second preference will be accorded to the vyaj badla shares, that is, the shares provided to a broker by a vyaj badla financier to carry forward his position in a particular scrip.

In this manner, dematerialised shares will continue to flow into the clearing house while physical shares willmove out. Over a period of a few settlements, the clearing house will only have dematerialised shares.

According to market sources, the move to have vyaj badla shares in such a form is expected to benefit the exchange, the broker receiving these shares from the financier as well as the financier.

Explaining the benefits which accrue from using such securities for vyaj badla financing, Meher Sheth of Prabhudas Liladhar, BSE stock-broking firm said, "Recently, we had to physically verify vyaj badla shares, which is a tedious job. In the dematerialised form, however, it saves our effort and assures of a good paper."

The exchange will benefit as it is assured of clean shares with good title which can serve as an effective collateral.