SEBI scraps no delivery period during Corporate announcements Events

To avoid volatility in markets, watchdog SEBI has done away with the practice of keeping shares under no-delivery during the record date for corporate announcements like bonus or dividend.

No-delivery period means that trading during the record date would not result in any delivery of shares.

However, this system was useful when trading used to take place in the physical form as certificates had to be delivered before record date starts to the registrars of companies.

However, the practice lost importance during the present days of demat or electronic trading.

"...it is decided to do away with 'no-delivery period' for all types of corporate actions in respect of the scrips which are traded in the compulsory dematerilaised mode," market regulator SEBI said in a circular.

Market analysts said the move will prevent market volatility.

"The announcement would prevent fluctuation in prices and it is good for the market," brokerage firm SMC Global Vice- President Rajesh Jain.

SEBI added the circular is issued to protect the interests of investors in securities and to promote and regulate the securities market and it would come into effect from August 1, 2009.

courtesy - economictimes