OTCEI revamps trading system

NEW DELHI, Feb 15: Over the Counter Exchange of India (OTCEI) has decided to revamp its trading activity by switching to share certificat...

NEW DELHI, Feb 15: Over the Counter Exchange of India (OTCEI) has decided to revamp its trading activity by switching to share certificates to attract investor interest.

Change from the present system of counter receipts (CR) (tradeable document on the exchange) comes into effect from March one when all the 114 listed companies and counter-receipts would cease to be valid trading document.

The move by OTCEI to shift from CR to share certificates or demetrialisation is a fresh initiative to improve liquidity on the exchange, which was almost dead a few years ago.

Story continues below this ad

“Decision to move to the new system is part of the new initiative taken by the exchange as under the counter receipts it was difficult to match the buyer and seller receipts which resulted in delay,” OTCEI director Dr L C Gupta said.

Currently trading on OTCEI is through CR, issued to an investor who is buying a scrip. Similarly a seller has to return the CR to the exchange when selling the scrip.

The buyer gets the final CR (i.e. title ofthe security) only when the seller delivers the receipts to the exchange. Gupta said the need for a change was felt since there was delay in the matching of buyer and seller CR. With the new mechanism, trading on OTCEI would be similiar to other stock exchanges.

OTCEI has already informed all the listed companies to move from CR to share certificates mode or dematerialisation. Companies that choose to dematerialise will give the option to their shareholders to retain their share certificates, Gupta said. All investors holding the valid CR will have to surrender them to the respective companies’ registrar and transfer agents for their conversion to share certificates or dematerialisation.

Story continues below this ad

The exchange has recently made other measures to increase trading volume on the exchange including moving from rolling to weekly settlement and a new computer-based trading system. Gupta said the new system has been installed as the earlier system was slow in executing the trade and regular technical snags resulted inhalt in trading.

OTCEI was the first screen-based stock exchange in the country with national reach targeted for small companies and investors. The exchange was set-up on the lines of National Automated Stock Exchange Daily Quotation (NASDAQ) in the United States but OTCEI could not take-off.

In recent past OTCEI had considered various options to revamp the exchange, including merger with National Stock Exchange (NSE).