National Stock Exchange begins electronic settlement of its unlisted shares

Mumbai, March 24 (IANS) 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.

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