MUMBAI — The National Stock Exchange of India (NSE) on Monday started
settling trades of its unlisted shares electronically, marking marks a major
shift from the previous manual process.
The transactions will now be handled through Central
Depository Services India Ltd (CDSL), making the transfer process faster and
more efficient.
The stock exchange had announced this change on Friday.
Despite this transition, NSE clarified that its shares
will remain unlisted, meaning they will not be publicly traded on any stock
exchange.
However, the move ensures that off-market transfers
comply with the Securities and Exchange Board of India’s (SEBI) regulations
under the Securities Contracts (Regulation) (Stock Exchanges and Clearing
Corporations) Regulations, 2018.
Unlisted shares refer to privately held shares of
companies that are not traded on public stock exchanges.
These include shares of startups, early-stage firms, and
large companies like NSE that have not gone public.
The decision to shift to electronic settlement is
expected to significantly reduce trade settlement times, which previously took
up to four to five months due to approvals required from NSE and SEBI.
Now, the process will be completed in just a few days.
This change is expected to boost trading activity in the grey market, where
NSE’s unlisted shares have seen strong demand.
The interest has grown, especially after BSE Limited’s
stock surged nearly 5,000 per cent over the past five years.
Under the new system, shareholders can transfer their
unlisted NSE shares using a delivery instruction slip (DIS) through CDSL.
The activation of NSE’s international securities
identification number (ISIN) from March 24 has enabled electronic transfers,
eliminating the need for manual submission of transfer applications.
NSE has also confirmed that the earlier two-stage share
transfer application process has been discontinued.
The move comes after SEBI directed a more structured
framework for unlisted share transactions last year.
