Mumbai, July 8: In a move aimed at creating a secondary market for Unit Trust of India's flagship scheme, US-64, the National Stock Exchange (NSE) has listed the scheme in its demat equity segment. The scheme, which has till now been listed in the wholesale debt market segment of NSE, has been able to create an almost negligible secondary market for itself.According to NSE deputy managing director Ravi Narain, the move will allow investors to buy dematerialised US-64 units in the primary as well as secondary markets. An investor could earlier buy dematerialised US-64 units by applying through the usual process followed in the physical form. The move to list the demat units in the demat equity segment will also eliminate the problems associated with getting odd-lots as in the demat mode even one unit will be considered as a market lot.
"If an investor were to have 153 units of US-64 there is no way he could have sold them unless it was on a trade-for-trade basis. He was forced to go to UTI for repurchasewhich made it cumbersome. In the demat form all this will change. He can sell any number of units. He also gets the benefit of liquidity and convenience as he trades through the nationwide system of the exchange. The process becomes faster and less cumbersome," said Narain.
US-64 being an open-ended scheme, the quotes would automatically settle in the band of the sale and repurchase price that UTI would be announcing from time to time. The risk to investors in price fluctuation would therefore be confined to this band which is a mere 30 paise.
"While today a US-64 unit can be procured from 51 branches of the UTI, the minute the scheme is put on the screen it will be available across 180 centres of the country and 1,000-odd brokers through the NSE network," said Narain.
More importantly, through the demat route the procedural problems related to the issuance of units does not arise as all the centres are connected to the depository through the registrar, MCS Ltd.
NSE's move is the first step towardsanother one being planned jointly by the National Securities Depository Ltd (NSDL) and UTI of listing the units in the equity segment and simultaneously putting in place an effective market-making mechanism which could, for a start, be kicked off by the broking subsidiary, UTI Securities. The procedure to be adopted in the next phase, according to sources, will be as follows: UTI will empanel a few brokers, initially UTI Securities, which will pick up a chunk of US-64 from UTI and provide two-way quotes through NSE's equity segment.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
