In a related development, some brokers have written to NSDL to urge the Securities and Exchange Board of India (Sebi) to extend the list of securities where only demat trading is permitted owing to sharp reduction in bad deliveries.

``The number of brokers who have opened clearing member accounts with the depository has topped the 2,000-accounts mark. These only comprise of brokers from four stock exchanges, ie the National Stock Exchange (NSE), the Bombay Stock Exchange (BSE), the Calcutta Stock Exchange (CSE) and the Delhi Stock Exchange (DSE)", said a top depository source.

``Two stock exchanges, Bangalore and Ludhiana, have already got all their systems in place. The pilot testing hasbeen carried out. They are awaiting Sebi registration which we expect should come through within the next 15 days,'' the source said. In addition the source disclosed that the Madras Stock Exchange has already placed the orders for the hardware and once this is in place the pilot testing of the systems would be carried out. The Over the Counter Exchange of India (OTCEI) too would also be in the depository mode shortly.

``The Pune Stock Exchange governing board, on the other hand, has approved the setting up of a trade guarantee fund following which they would be able to sign up with the depository", said the source. "Once all these exchanges come within the depository fold, which is now expected shortly, we would be looking at more than 3,000 brokers adopting the depository system of settlement of trades", the source added.

"The broker is the most crucial link in the entire chain. Once he is convinced of the merits of the system will he push his clients to the depository. The number of brokers joiningthe process is increasing by the day and this is a very heartening sign", said the source.

In fact, some brokers have gone to the extent of writing to the depository chief, CB Bhave, asking him to impress upon Sebi to push the entire market to the compulsory demat mode. A source at the depository confirmed the receipt of such letters which have cited the elimination of bad deliveries as the prime reason for the suggestion to move to a purely paperless regime.