SECURITIES AND EXCHANGE BOARD OF INDIA
SECONDARY MARKET DEPARTMENT
Mittal Court, A Wing, Gr. Floor,
224, Nariman Point, Mumbai 400 021
SMDRP/POLICY CIR.-19/2435/98
JULY 29, 1998
The President/Executive Director/
Managing Director of all Stock Exchanges/
NSDL / All Custodians. Dear Sir,
Sub.: Trading by Institutional Investors and settlement of trades in
Demat Securities
Please refer to our Circular No. SMD/Policy Cir. 1/98 dated January 12, 1998 advising inter alia, the introduction of compulsory settlement of trades in demat form in respect of eight scrips with effect from January 15, 1998 for the Institutional Investors, viz., Domestic Financial Institutions, Banks, Mutual Funds and Foreign Institutional Investors having a minimum portfolio of securities of Rs.10.00 crore as on the latest balance sheet date.
It was subsequently decided to add 22 more securities to the aforesaid list in which the institutional investors have to settle the trades by demat securities with effect from June 1, 1998. The list was increased by an additional 20 scrips with effect from August 10, 1998.
It has now been decided to add 60 more scrips for compulsory dematerialised trading by institutional investors, with effect from October 15, 1998, taking the total of such scrips to 110. The list of scrips along with the various applicable date for compulsory dematerialised trading is given as annexure A.
It has also been decided to do away with the minimum portfolio investment in securities of Rs.10.00 crore by institutional investors and to include Overseas Corporate Bodies (OCBs), under the Institutional Investors for this purpose. This would come into effect from September 1, 1998.
It may be noted that these institutional investors may purchase the securities in the physical segment subject to the securities being dematerialised immediately. The delivery of dematerialised securities of these scrips is treated as good delivery in the physical segment on the stock exchanges where depository based settlements are available.
It was also decided that the Clearing Houses of the Stock Exchanges and Clearing Corporations should accept dematerialised shares in cases of rectification of company objections.
Institutional Investors may deliver non pari-passu shares of the specified companies in the physical form, in case the Issuers have not entered into an agreement with NSDL for dematerialisation of such securities. The institutional investors shall dematerialise their holdings of the non pari-passu shares within two weeks of the shares becoming pari-passu.
Yours faithfully,
P. K. KURIACHEN
DIVISION CHIEF
SECONDARY MARKET, DEPOSITORY,
RESEARCH AND PUBLICATIONS DEPARTMENT
Encl : Annexure A
