Bombay Stock Exchange
Bombay Stock Exchange (BSE) established the CDSL in 1998, which commenced operations on March 22, 1999. CDSL is a public company for profit, and is owned by the BSE, Bank of India, Bank of Baroda, SBI, HDFC Bank, Centurion Bank, and Standard Chartered Bank, Bank of Maharashtra, Union Bank of India, Calcutta Stock Exchange and other depository participants.
The changes in the last five years, thanks to NSDL and CDSL, have changed the face of the Indian capital market. Gone are the days of paper deliveries and the related issues of bad deliveries. The settlements through book entry transfer of securities have removed the major problem of bad deliveries, delays in settlement and the related cost in the settlement. International norms of rolling settlements have been introduced and well adapted to the Indian market conditions.
With effect from April 2002, the system of settlement in the Indian capital market has moved to T +3 settlement. Both the depositories have faced the challenges of T +3 effectively and efficiently.
With these changes, the settlement system in India has been completely overhauled. The move from an Account Period settlement in "paper form only" to a T+3 settlement in pure electronic form has been achieved in a record span of under 5 years, whereas it took anywhere between 10-20 years in most of the developed countries.
Today, Indian settlement infrastructures have been built to meet the requirements of the 21st century.
Everybody will envy the settlement infrastructure, wherein 99 per cent of the settlement in the country takes place in the dematerialized way.
Even the developed capital markets are struggling to achieve this. Improvements that have taken place in the Indian capital market have been the model for others to emulate.
Not far behind is CDSL, which has an equal number of companies whose shares are available for demat. CDSL also has 1710 debt instruments available for demat. CDSL services investors through its network of 176 depository participants. This impressive result is a reflection of a campaign that involved:
Strong government, regulatory and stock exchange support - the Minister of Finance, Securities Exchange Board of India (SEBI), and Reserve Bank of India (RBI) openly promoted the depository and provided supportive regulatory changes (e.g., SEBI's introduction of compulsory dematerialized settlement only in a growing number of securities starting in 1999 and RBI's increase in permitted lending limits against dematerialized securities pledged).
Depository Participant (DP) supports as DPs saw not only the benefits of reduced paper, but also new clients and the ability to cross-sell a growing number of products/services to them.
An aggressive investor communications programme (publications, seminars, website, videos, TV "infomercials" and credible spokespeople from across a spectrum of backgrounds — academics, business writers, government/regulatory officials) and provision of an active grievance redressal mechanism.
Both the depositories have successfully deployed technology for the full benefit of the ultimate stakeholder i.e. the Indian investor. Today, making use of Internet, these depositories provide user-friendly features, which provide complete control to the investor in the settlement process.
In line with global trends, further steps are being taken to implement the world's best practices. The planned implementation of an Electronic contract Note System is the first step towards "Straight Through Processing", which is aimed at enabling a move from T +3 to T +2 settlement.
Additionally the implementation of RTGS (Real Time Gross Settlement) system, planned for implementation in the near future, will improve the payment side of settlement.
Bombay Stock Exchange (BSE) established the CDSL in 1998, which commenced operations on March 22, 1999. CDSL is a public company for profit, and is owned by the BSE, Bank of India, Bank of Baroda, SBI, HDFC Bank, Centurion Bank, and Standard Chartered Bank, Bank of Maharashtra, Union Bank of India, Calcutta Stock Exchange and other depository participants.
The changes in the last five years, thanks to NSDL and CDSL, have changed the face of the Indian capital market. Gone are the days of paper deliveries and the related issues of bad deliveries. The settlements through book entry transfer of securities have removed the major problem of bad deliveries, delays in settlement and the related cost in the settlement. International norms of rolling settlements have been introduced and well adapted to the Indian market conditions.
With effect from April 2002, the system of settlement in the Indian capital market has moved to T +3 settlement. Both the depositories have faced the challenges of T +3 effectively and efficiently.
With these changes, the settlement system in India has been completely overhauled. The move from an Account Period settlement in "paper form only" to a T+3 settlement in pure electronic form has been achieved in a record span of under 5 years, whereas it took anywhere between 10-20 years in most of the developed countries.
Today, Indian settlement infrastructures have been built to meet the requirements of the 21st century.
Everybody will envy the settlement infrastructure, wherein 99 per cent of the settlement in the country takes place in the dematerialized way.
Even the developed capital markets are struggling to achieve this. Improvements that have taken place in the Indian capital market have been the model for others to emulate.
Not far behind is CDSL, which has an equal number of companies whose shares are available for demat. CDSL also has 1710 debt instruments available for demat. CDSL services investors through its network of 176 depository participants. This impressive result is a reflection of a campaign that involved:
Strong government, regulatory and stock exchange support - the Minister of Finance, Securities Exchange Board of India (SEBI), and Reserve Bank of India (RBI) openly promoted the depository and provided supportive regulatory changes (e.g., SEBI's introduction of compulsory dematerialized settlement only in a growing number of securities starting in 1999 and RBI's increase in permitted lending limits against dematerialized securities pledged).
Depository Participant (DP) supports as DPs saw not only the benefits of reduced paper, but also new clients and the ability to cross-sell a growing number of products/services to them.
An aggressive investor communications programme (publications, seminars, website, videos, TV "infomercials" and credible spokespeople from across a spectrum of backgrounds — academics, business writers, government/regulatory officials) and provision of an active grievance redressal mechanism.
Both the depositories have successfully deployed technology for the full benefit of the ultimate stakeholder i.e. the Indian investor. Today, making use of Internet, these depositories provide user-friendly features, which provide complete control to the investor in the settlement process.
In line with global trends, further steps are being taken to implement the world's best practices. The planned implementation of an Electronic contract Note System is the first step towards "Straight Through Processing", which is aimed at enabling a move from T +3 to T +2 settlement.
Additionally the implementation of RTGS (Real Time Gross Settlement) system, planned for implementation in the near future, will improve the payment side of settlement.