Rolling settlement in `A' group on Oct 23

Rolling settlement in `A' group on Oct 23
EEB & AGENCIES

Mumbai, Sep 19: In a bid to kick off rolling settlement in `A' group scrips from October 23, the Securities and Exchange Board of India (SEBI) has asked the BSE and the NSE to prepare a cumulative list of scrips that can be brought under the system from their portfolio under badla and Automated Lending and Borrowing Mechanism (ALBM) respectively.

While these would work out to 170-180 scrips, the list would be expanded further by including some scrips in the compulsory rolling settlement (CRS) system, subject to their meeting eligibility criteria, SEBI executive director Pratip Kar told reporters after the meeting of the risk management committee here today.

Currently, about 150 scrips are under badla (modified carry forward system) and over 160 under ALBM. In view of the reduced risk associated with CRS, the committee felt that the margin system should be restructured and entrusted the task to a sub-group set up with representatives from SEBI, NSE and BSE today, he said.

The sub-group was asked to submit its report in the next meeting of the committee, he added. Since the introduction of daily and weekly badla under CRS would have an impact on liquidity and volumes, it was decided to bring about 500 scrips under continuous net settlement (CNS), he said, adding that the scrips would also be identified by the sub-group.

Meanwhile, SEBI has agreed to the BSE proposal to simplify margins under badla to a single 12.5 per cent slab against two slabs of 10 and 15 per cent for up to and above Rs 20 crore of market exposures now, he said.

The risk management group of Sebi decided to form a sub group for the specific purpose of working out an alternative margining system in the context of the imminent shift of specified group shares from weekly to rolling settlement mode, top Sebi sources said here today.

Keeping in mind the reduced risks in the rolling settlement environment, the group agreed that the margins should be appropriately restructured based on a simulation exercise and place it at the next board meeting.

Meanwhile, as the deadline for compulsory settlement of trades in dematerialised form for all investors approaches, there are about 259 companies which are unlikely to establish connectivity with depositories and Securities Exchange Board of India (Sebi) has decided today that they should be traded only on "trade for trade settlement" window of the exchanges.

The trade for trade window permits investors to report trades entered at a particular price between two parties as in a negotiated deal. As there is limited liquidity in the counter, price discovery gets distorted and marketmen opine that it will only lead to sharp volatility in these counters depending on sudden spurt in demand and supply in these counters.

Some of the prominent companies which figure in the list of 57 companies which will be traded in trade for trade settlement basis from September 25, 2000 are: Asian Coffee, Bajaj Tempo, Baroda Rayon, Bharti Telecom, FGP Ltd, GKW Ltd, Herbertsons, Jagatjit Industries, Mafatlal Industries, Nath Pulp, Parekh Platinum, Phillips Carbon Black, Rama Pulp, Rajinder Steels, SIV Industries.

Among companies which will be traded on trade for trade settlement window from October 30, 2000 are Andhra Petro, ATV Projects, Cals Ltd, Cityman Clothings, Cranex Ltd, Credence Sound, Deccan Granites, DCM Financial, Dhar Cement, Eider Electronics, Flexo Film Wraps, GR Cables,GTC Industries, Jamna Auto, Kanoi Paper, Kesar Petro, Laffans Petro, Linaks Micro, Optel Tele, Pennar Aluminium, Pertech Computers, REPL Engg, Solid Carbide, Steelco Gujarat, Svam Software, Todays Writing, Torrent Gujarat Biotech, UTI Master Equity Plan'95, Vatsa Corp, Vishwas Steels and Zenith Fibres.