New plan for stocks delayed

THE inter-custodian netting system introduced by the Bombay Stock Exchange in early-November last year is being ignored by financial institutions because it has failed to attract the interest of major custodians.

The system is similar to inter-institutional net settlement that takes place on the London Stock Exchange.

A meeting between the major custodians on this issue was to have taken place in mid-December and then this week. It has now been further postponed to the end of January.

Stock Holding Corporation of India and other custodians were supposed to establish a scheme so they could use the exchange inter-custodian mechanism.

But the custodians have been divided over the issue of deliveries in marketable lots of shares - usually 50s, 100s, or jumbo lots running into thousands of shares.

Some of the custodians insist on jumbo lots since they find it simpler to deal in huge volumes. Others feel that these massive lots would be difficult to sell in the open market.

This issue is expected to be resolved at the meeting.