Patil, however, ruled out the possibility of NSE initiating the move in isolation saying that the measure would need to be brought about by the regulator and be undertaken by all exchanges.

According to Patil, moving to a rolling settlement would eliminate a lot of problems. The only problem coming in the way of introducing such a mechanism (which is already prevalent in the demat segment of NSE and BSE) is the handling of paper.

``The banking system is geared up to facilitate the rolling settlement. What we need is reduction of paper as handling too much of paper is cumbersome and time consuming. All highly active scrips need to see significant levels of dematerialisation. This is already happening if the high levels of dematerialisation being witnessed are any indication. Thereis no need to wait for all the securities to be dematerialised and one can kick-off rolling settlement before the end of the year,'' said Patil.

He added, that with the introduction of derivatives, brokers would shift more towards the depository as most of them would be arbitraging between the cash and futures markets and therefore would not like to be constrained by handling of paper.

The National Securities Depository Ltd (NSDL) chief C B Bhave, has already kicked-off the debate on the introduction of rolling settlement in the physical segment as well. Bhave feels this can be done by mid-August itself, when about 50 per cent of the delivery in the physical segment would be in the form of demat shares. Sebi, too, is taking a look at the issue more seriously now following the events of the past fortnight.

The last settlement has witnessed a deluge of deliveries coming in the demat form, largely because of heavy selling by institutions, for whom it is mandatory to sell demat shares only with respect tocertain securities.

In 12 securities, demat shares delivered accounted for over 70 per cent of the total delivery. In the case of State Bank of India and IDBI, the figure was 99 per cent and 97 per cent respectively.