By January 17, 200 scrips will be in the compulsory demat mode for all investors and 500 scrips for institutional investors.

For retail investors, in the first phase, 56 scrips will be included. Of this, 23 scrips are from the A group of the BSE and 33 from the B1 group. Of the 33 B1 scrips, the initiative for demat trading has come from 11 companies, 16 scrips are proposed to be included in rolling settlement and six scrips have large incidence of bad deliveries.

The second phase (from January 17) will see the list expanding by 40 more scrips for retail investors. In this phase the remaining 33 scrips in the A group will be included and seven from the B1 group. This would bring the entire A group would come under compulsory demat mode.

At a meeting of its working group on Tuesday, Sebi reviewed the progress in the dematerialisation of the existing 104 scrips. Convinced that the backlog of demat is under control, the market regulator decided to expand the list. The expansion was delayed following a massive backlog in dematerialisation witnessed a couple of months ago. Registrars were flooded with demat requests as the previous round of demat programme coincided with the rally in the market, the financial results and the seasonal book closures. A large number of complaints from investors forced Sebi to step in to ensure that the demat process was not derailed.

Sebi is of the view that DPs are in a position to process the backlog as well as fresh requests. According to the market regulator, 46 per cent of dematerialisation requests received by the registrars is pending for less than 15 days and another 32 per cent between 15 days to a month.

The two depositories, NSDL and CDSL, have assured the market regulator that their systems can take the additional load. Sebi is also directing companies included in the list to sign up with both the depositories. Besides, Sebi would also ask registrars, custodian and other intermediaries to open accounts with the two depositories.

INSIGHT
Artificial shortage, temporary flare-up in scrip prise on cards

Despite the phased compulsory dematerialisation programme, investors continue to complain of delays extending up to two months. Registrars have been finding themselves flooded with thousands of requests and are unable to complete the process on time. The result: An artificial shortage of tradeable securities and the temporary flare-up in their prices.

The timing of the next two phases could once again add to the pressure on the system. With a new government in place, November should witness hectic trading on the exchanges. Historically, January witnesses a deluge of FIIs funds into the Indian markets. The two lists include a number of infotech scrips with low floating stock. Since the demand for such scrips already outstrips their supply, any artificial shortage will only make matters worse.

Sarad Saraf