Sebi senior executive director LK Singhvi has, in a letter dated October 14, directed the exchange to discuss the issue at the board level. It may be recalled that in early 1997, while demat trading was still at a nascent stage, Sebi constituted a committee under the chairmanship of R Chandrasekaran to study the problems and recommend suitable measures to overcome the problems of bad delivery.

"The recommendations were accepted at the 39th board meeting of Sebi. However, the implementation phase has been slowed down considering the fact that demat trading has already eliminated more than 50 per cent of the bad paper from the system," explained a senior official of Sebi, also making a reference to the good and bad delivery norms whichhave been streamlined in the past one year.

Although the regulator has not insisted on the compulsory implementation of the scheme either at the company or the exchange level, it has decided to offer a special incentive to those companies which implement the standards as prescribed by the committee. The special incentive would be in the form of allowing the company to use the label of `Sebi-approved standards', which would help the company gain investor confidence.

For the approval and implementation of the scheme, Sebi has advised companies planning to introduce the scheme to approach the relevant regional stock exchange.

Further, the regulator has also decided to appoint a standing committee, comprising BSE, NSE, DSE, CSE and BgSE officials to facilitate the process of approving the various entities involved.

"Chandrashekaran will be a part of the standing committee and the secretariat would be at the BSE," said a Sebi source.

According to Sebi sources, the scheme recommends the adoption ofcertain minimum standards for paper, especially with the incorporation of specific features on certificates to identify the ownership and authenticity of the certificates.