Speaking at the second Asia-Pacific Central Securities Depository group meeting, Mehta said that with regard to institutions trading in the demat mode, Sebi had expanded the list from eight to 300 in less than a year. "In the same manner we hope to increase the list of scrips where all investors will be required to trade only in demat shares to 300 in a year's time. On this front we are moving slightly slowly as we believe in gradualism. An important reform as this cannot be brought overnight," said Mehta.

The two-day meeting is being attended by heads ofdepositories of countries like China, Japan, Korea, New Zealand, Hong Kong, Malaysia, Taiwan, Thailand, Australia, Pakistan and Philippines. NSDL chief CB Bhave will be the chairman of this group for the coming year. The meeting will discuss issues pertaining to immobilisation versus dematerialisation, implication of the Asian turmoil, year 2000 preparedness and merging of clearing house and connectivity between depositories.

"Apart from drastically bringing down the number of complaints received by Sebi for bad delivery (from 200,000 to 20,000), mandatory demat trading will also bring in rolling settlements. We will introduce rolling settlements in all those scrips where all trades will take place in demat mode," said Mehta."In most countries the management of change has not been proper and this has led to problems in these markets especially in the Far-East countries. It is for this reason that we believe in gradualism and one is sure that this approach will succeed," he added.

Lauding the efforts ofNational Securities Depository Ltd (NSDL) in promoting the depository, Mehta said that despite the bottlenecks and the gradual approach being adopted by Sebi, India would achieve in two-three years what USA took 20 years to achieve in terms of adoption of the depository system.

Mehta said that the Indian markets were one of the least volatile in the world. He added that this was because Indian markets had developed considerably in the past couple of years and strict margin enforcement systems had been put in place. "We had to take action against several intermediaries and have been dragged to the court. On several occasions vested interests have misused the powers of the court to stall Sebi's actions. Despite this we have been able to take action against a number of intermediaries," said Mehta.

"Several FIIs have in fact sold in India to meet their redemption needs in other markets simply because they have found the Indian markets very liquid. Most FIIs are still net buyers and their net investment hasdeclined only by about $700 million in the past year despite the turmoil in several financial markets across the globe," he added.

"To register a 6 per cent growth in volatile conditions is a tremendous performance," said Mehta. NSDL chairman SH Khan said that public sector banks need to jump into the depository system as currently only five of them have joined as depository participants in comparison to almost all private sector banks.

He also dismissed the point that custody charges were keeping investors away as according to him even in the case of 39 companies where investors are not required to pay any custody charge, there has been no significant increase in demat trading.

He lauded the role of the Reserve Bank of India and Sebi in pushing the depository process further.