HSE Executive Director M Subrahmanyam told The Financial Express that it would be mandatory on the part of the members to accept the demat deliveries with effect from November 16, 1998. The HSE has asked all members to open DP accounts with the depository participants either with Stock Holding Corporation of India or Karvy Consultants and furnish the account details for transfer of deliveries in demat form, he added.

To comply with the same, the bourse has given one week's time to the members, Subrahmanyam said. Even though the HSE does not have a depository of its own, some of the members are already receiving demat stocks from NSE and other bourses.

Though the exchange had obtained in-principle approval from NSDL to start its depository in 1997 itself, the same could not materialise since theexchange had to establish a settlement guarantee fund first. HSE is now working to establish SGF and altering required bye-laws to start SGF, which will take place in two months time, he said.

Nine HSE listed companies have so far completed the process of dematerialisation of their stocks including the Global trust Bank, Cheminor Drugs, Dr Reddy Lab, Coromandal Fertiliser, Satyam Computer, AP Rayon, ITW Signode, ITC and ITC Agro.

To bring rest of the companies into the demat net, HSE proposes to initiate a dialogue with other companies listed with it and encourage them to get dematerialisation of their stocks to eliminate bad paper from the market, he said.