"The committee would take a view whether we could start off with uniform settlements in the larger stock exchanges and the smaller would follow suit," said M R Mayya, chairman of the committee. The SEBI-appointed committee has, however, taken into consideration some practical problems like switching over to uniform settlements. Currently, stock exchanges follow different settlement periods (normally a week during which brokers will have to either square up or take delivery). The problems which were cited by the committee members centered around certain practical difficulties such as that of handling of securities by custodians and that of strategic arbitrage.

A consensus seems to have emerged that a uniform settlement would lead to a considerable fall in volumes and the consequent possibility of a decline in theliquidity of the market.

Interestingly, the Bombay Stock Exchange (BSE) has been making representations for the increase in the number of trading days in the non-specified section so as to which would help improve the liquidity of this section. Besides citing the problem of a possible reduction in the liquidity, the participants also hinted at the loss of arbitrage opportunities. Given the fact that BSE has the facility of carry forward of positions at a contango rate or backwardation rate, it becomes easier for the brokers to resort to either strategic arbitrage or shift their positions from one exchange to another.

However, in the wake of uniform settlements, it would be difficult for the brokers to avail of this benefit, and it is likely to create the problem of hectic squaring off of positions on the last day of the trading cycle. The committee also felt that it needs to collect more data relating to volatility especially on Tuesday's and Friday's on the NSE and BSE respectively.

Decision to studyall these crucial aspects closely even before arriving at the final diktat, has prompted the committee to meet sometime in future.