The country’s largest depository, NSDL, has mooted that a committee be set up to look into the errors in the securities transfer process, due to which several investors and brokers had taken a hit last week. In a letter to the capital markets regulator, Sebi and depository, CDSL, it has recommended that the episode be probed, to prevent repeat of any such incidents in the future, a person familiar with the development said.

Delay in a few inter-depository transactions (between NSDL and CDSL) on Wednesday and Thursday last week, had prompted the stock exchanges to auction a few shares, resulting in losses to investors and brokerages. This incident had raised questions about the efficacy of the systems/software used at the two depositories, in particular NSDL, a depository that boasts of more than 80 lakh demat accounts of investors across the country.

NSDL sources confirmed that indeed such a letter had been shot off to Sebi and CDSL asking that representatives of the software vendors to the two depositories (CMC to CDSL and TCS to NSDL) and an expert from IIT Bombay jointly probe the episode.

So far it has been a blame game, with one depository going to the extent of issuing a press release saying that its systems were in place for the said two days. Experts feel that the collapse in the transfers could be either due to high volumes and overload or technical glitches in the software. It would not be out of place here, to mention that the exchanges, especially NSE, have seen a significant jump in its cash and derivatives turnover over the last few months.

It is learnt that officials from Sebi were keen to know the reasons behind the systems failure on two days. Hence, the decision to set up a committee was born. On the two days, the transfer of shares (from the investor’s CDSL account to a broker’s NSDL pool account) that usually takes less than two minutes, took over an hour, resulting in exchanges auctioning off the shares of several investors

-India Times

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