Shares of the National Stock Exchange (NSE), which earlier took more than a couple of months to be transferred between shareholders, can now be transferred in under a week as the status of the unique security code of the shares -- International Securities Identification Number or ISIN in market parlance – has changed to ‘defreezed’ with effect from today.
This assumes significance as NSE shares, which is the country’s largest stock exchange in terms of market share and the largest globally in the derivatives segment in terms of the number of contracts traded, are in huge demand. NSE shares are among the most actively traded in the unlisted space.
“… effective from the said date, the shares of the Company can be transferred through the Delivery Instruction Slip (DIS) mechanism and the existing process of submitting share transfer application under Stage I and Stage II process, shall be discontinued,” stated a release by NSE Friday last week.
Simply put, the whole process of monitoring and verification will change from manual to automated, as NSE’s designated depository CDSL will keep track of shareholding of the investors based on PAN. They will also be able to get know your customer ( KYC) and other details verified through the DP account.
Further, with the new process in place, CDSL will be able to check if there is any pending regulatory actions against the buyer from the PAN details even as the exchange will also continue doing the ‘fit & proper’ check at its end. This is an important check since all shareholders of exchanges need to be ‘fit & proper’, as per norms laid down by the capital market regulator.
Meanwhile, the new process is also expected to save costs involved in the share transfer process as many unnecessary formalities will now not be required. Also, as the depositories will be sharing information with each other regarding shareholding of stock exchanges, it will be easier to ensure that the ownership of brokers, associates and agent’s shareholding does not exceed 49 per cent limit.
“We believe it is good for shareholders as the process will be much easier,” NSE’s RTA Link Intime India MD Kishore Thakkar told Moneycontrol.
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Currently the process is divided in two stages. Stage 1 mainly involves paperwork – document verification, KYC, filing of share purchase agreement with NSE, among others. Stage 2 is a more rigorous process, wherein NSE thoroughly scrutinises the documents and verifies it in order to check the ‘fit & proper’ status before executing the share transfer.
With NSE shares in huge demand, the RTA of the exchange was burdened with many ‘fit & proper’ checks amid complaints of slow transfer process.
The increasing demand for NSE shares is corroborated by the fact that the number of shareholders of the exchange jumped from 1941 as on December 31, 2021 to 11,274 in December 2023 to nearly 20,500 as on December 31, 2024.
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