Synopsis
The National Stock Exchange of India has begun electronic settlement for unlisted shares, enhancing efficiency and compliance with regulations. This transition promises faster transaction times and is expected to stimulate trading in the grey market.Key Takeaways
- NSE has shifted to electronic settlements for unlisted shares.
- CDSL will handle the transaction process.
- Unlisted shares remain non-publicly traded.
- Settlement times reduced from months to days.
- This is part of a structured framework directed by SEBI.
Mumbai, March 24 (NationPress) The National Stock Exchange of India (NSE) has officially commenced the electronic settlement of trades involving its unlisted shares, signifying a significant transformation from the earlier manual procedures.
The transactions will now be facilitated through Central Depository Services India Ltd (CDSL), enhancing the speed and efficiency of the transfer process.
This change was announced by the stock exchange on Friday.
Despite this modernization, the NSE has clarified that its shares will remain unlisted, meaning they will not be available for public trading on any stock exchange.
Nonetheless, this initiative guarantees that off-market transfers are in line with the regulations set forth by the Securities and Exchange Board of India (SEBI) under the Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2018.
Unlisted shares are privately held shares of companies that do not trade on public stock exchanges.
These include shares from startups, early-stage firms, and large entities like the NSE that have not yet made their public debut.
The transition to electronic settlement is anticipated to significantly cut down trade settlement times, which previously required up to four to five months for approvals from NSE and SEBI.
Now, this process will be completed in just a few days. This development is expected to invigorate trading activity in the grey market, where there has been a robust demand for NSE's unlisted shares.
Interest has surged, particularly following the nearly 5,000 percent increase in BSE Limited’s stock over the past five years.
With the new system, shareholders can transfer their unlisted NSE shares using a delivery instruction slip (DIS) via CDSL.
The activation of NSE's international securities identification number (ISIN) on March 24 has made electronic transfers possible, removing the necessity for manual submission of transfer applications.
Additionally, NSE has confirmed that the previous two-stage share transfer application process has been eliminated.
This shift follows a directive from SEBI that called for a more structured framework for unlisted share transactions last year.
