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Vivek Law
MUMBAI, Nov 11: Pressure is mounting on Sebi from the broking community to push more and more scrips into the compulsory demat trading mode. The Association of National Stock Exchange members of India (Anmi) has written to Sebi chairman, D R Mehta, asking him to bring in all the Nifty-50 stocks into the mandatory demat trading ambit preferably by January 4 itself.
Sebi has on its part decided to seek the views of the National Securities Depository Ltd (NSDL) chief C B Bhave on the request by the brokers' association. Bhave himself received letters from several individual brokers urging the speedy introduction of mandatory demat trading in a number of scrips.
In its letter to Sebi, Anmi has said that a number of its member brokers have written to the association seeking expansion of the mandatory demat list. Sebi has put 12 stocks on the compulsory demat map from January 4 onwards and this list would be expanded to 31 from February 15 onwards.
``This measure will make trading more transparent and willdefinitely lead to attracting individual investors who have fled the market due to the extreme volatility experienced in the markets and also due to the risk of bad paper being received,'' Anmi states in the letter.
When contacted, secretary general of Anmi, Ishaq Merchant, said that brokers are feeling more and more comfortable in trading in a demat environment. ``We feel that all the Nifty-50 stocks should be brought into the demat mode at the earliest. The move will enhance the credibility in the market,'' he said.
Sebi executive director incharge of depositories, Pratip Kar told The Financial Express that the move by brokers to push for greater demat trading is a welcome one and that he would take up this matter with the NSDL chief C B Bhave. Interestingly, brokers who have been slow to shift to the demat mode of trading are now beginning to put pressure on the regulators to shift the market to a demat mode at the earliest.
A number of institutions, it is learnt, have made it clear to their brokersthat they would accept only demat shares as delivery. Moreover, a large number of brokers are increasingly delivering only demat shares in the market.
However, till even a small percentage of paper exists in the market, the buyer will always be at a risk of receiving physical shares rather than a demat one. The only way to get rid of this problem is to make demat trading mandatory.
``Brokers who have had a feel of trading through the depository do not want to touch physical shares anymore. This is a healthy sign as the broker is very critical element in the market and if he accepts the concept he would play a crucial role in pushing his clients to the depository as well,'' said Bhave.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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This story was printed from Net Express located at http://www.expressindia.com. Net Express provides a portal to India, with news from The Indian Express and The Financial Express along with sites on travel and tourism, the entertainment industry, the power sector, the environment and much more.
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