Speaking to The Financial Express, IDBI-Principal Asset Management Company Ltd, managing director and CEO Sanjay Sachdev said, "The introduction of rolling settlement is a positive step from a long-term view point although it might result in initial hiccups. The security market regulator must be committed to introduce rolling settlement in order to align it with the best international practices. But the regulator has to bring in a uniform settlement system prior to introduction of rolling settlement, otherwise arbitrage opportunities would persist." However, the broking community was sceptical about the idea of rolling and alleged that volumes would plummet, bringing down the liquidity in the market because the day traders who presently contribute 70-75 per cent of the volume would not be able to participate. They cited the example of volumes having already plummeted for the stocks under badla in the rolling mode when Securities and Exchange Board of India (Sebi) allowed trading on an experimentalbasis in November 2000.

According to a broker of a leading brokerage firm, "The market, like water, will always find its own level irrespective of rolling. Even the regulator's recent decision to ban short-selling has failed to stop the slide in the market. In overseas markets, rolling settlement has been successful because their futures market is fully developed and provides great depth to the market. In our case, the options and futures market is at a nascent stage and investors are comfortable with the carry-forward system." According to Refco-Sify Securities India, managing director Vineet Bhatnagar, "Given the reform process initiated in the financial sector, the decision to introduce rolling settlement is a positive step and it is in line with international practices. The electronic fund transfer, which would be in place within a few months, would result in better risk containment and efficient transactions in the capital market."

"The recent decision to allow banks to invest in ALBM and BLESS is likely to improve liquidity in the market and simultaneously bringing down the rates," added Mr Bhatnagar.

The finance minister on Tuesday announced that the government would initiate legislative changes to give more power to Sebi to ensure investor protection and announced measures to corporatise the stock exchanges, apart from the introduction of rolling settlement in A group stock.