Rolling settlement to start in ten scrips from Jan 10

MUMBAI, NOV 30: Indian stock exchanges would introduce rolling settlement with effect from January 10. The Bombay Stock Exchange (BSE) wi...

MUMBAI, NOV 30: Indian stock exchanges would introduce rolling settlement with effect from January 10. The Bombay Stock Exchange (BSE) will be the first exchange to introduce the new system in the country.

The National Stock Exchange (NSE) would introduce it two days later while the other exchanges would follow thereafter. The Securities and Exchange Board of India (SEBI) in a meeting today with all stock exchange representatives and other market players decided to kick off the rolling settlement with 10 scrips which are perceived to have sufficient liquidity.

These scrips, however, are not part of the carryforward stocks. SEBI has selected ten scrips including BFL Software, Citicorp Securities, Cybertech Systems & Software, Hitech Drilling Services, Lupin Laboratories, Maars Software International, Morepan Lab, Sri Adhikari Brothers, Tata Infotech and Visual Soft.

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The rolling settlement would be on T+5 basis, `T’ representing the trade day and `T+5′ implying settlement on the 5th trading day. Whilethis would be the minimum requirement, SEs are free to introduce a shorter rolling settlement period. These scrips were chosen on the basis of the criteria, that they should be in the compulsory demat list and have daily turnover of about Rs 1 crore or more.

As rolling settlement marks a major change in the market architecture, the committee had decided to introduce it with a limited number of scrips having liquidity. Based on the experience of the exchanges, clearing houses and clearing corporations, depositories, custodians, brokers, and investors, with these scrips, Sebi would expand the list further. The list does not include scrips which have carry forward trading facility. The J R Verma committee will recommend modalities for carry forward mechanism under the rolling settlement. The committee concluded its deliberations yesterday and its report is expected shortly.

The Varma committee on `badla’ under rolling settlement is in favour of recommending weekly badla settlements considering highertransaction costs involved in daily settlement. Some of the stock exchanges have brought forth the problem of high transaction costs involved in daily badla, though the daily settlement would be easier to implement, Varma had said. He said the report would be submitted to regulatory body within a fortnight. He said when the accounting period under rolling settlement would be on a daily basis, it would not pose any problem for implementing daily badla.

Though the committee is in favour of weekly badla, it is yet to decide where it would be exactly placed – between weekly futures and weekly carry forward systems, he added. The ultimate aim of the committee would be to integrate the badla system with weekly futures, Varma said. The committee, he said, would also recommend imposition of gross margins based on clients.

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6 months lock-in for non-promoters
MUMBAI: Non-promoters who have been allotted shares preferentially in an initial public offerings of their shares only after the expiry of sixmonths from the date of issue.

Venture capital funds and employees are, however, exempt from this provison, officials of Securities and Exchange Board of India (SEBI) said here today.

According to SEBI officials, shares allotted preferentially at a differential price to non-promoters such as mutual funds, banks and others falling in this category would have their shares locked in for a period of six months from the issue date.

During this lock in period the market is expected to settle down as well as the shares from the IPO would also have stabilised.