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Sunday, July 08, 2001

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UTI sounds SEBI on stock exchange route

Ambarish Mukherjee

NEW DELHI, July 7

THE Unit Trust of India (UTI), in a bid to offer an exit route to US-64 investors, has approached the Securities and Exchange Board of India (SEBI) to allow retail investors to unload their units through the stock exchange route.

UTI wants SEBI to allow retail investors to sell up to 5,000 units of US-64 in the physical form through the stock exchanges, to ensure easy liquidity.

Highly-placed sources in stock exchanges told Business Line that UTI was in talks with SEBI for amending the rules relating to the physical transaction of shares which are otherwise in the compulsory demat form.

Currently, SEBI rules permit an investor to sell his share also in the physical form, even if the scrip is in the compulsory demat segment, if the number of shares are less than 500 and if the seller is the shareholder himself. An investor can sell any n umber as long as it is less than 500.

According to UTI's database, more than half the retail investors in US-64 hold less than 10,000 units each.

Retail investors in US-64 have been left in a daze following the suspension of sale and repurchase of US-64. The only exit route available in the country is through the wholesale debt segment of the National Stock Exchange (NSE). But that is essentially in the demat format and is used by financial institutions, and of hardly any use to small and retail investors.

Moreover, because UTI's own purchase price had always been higher than the price quoted at NSE's debt market and UTI's purchases were in the physical form, there is hardly any retail investor who has gone ahead to convert holdings in demat form. Now, if an investor tries to get his holdings dematerialised, the process will take at least one month.

According to sources, the UTI move to provide US-64 investors an exit route through stock exchanges will go through. The chances are that by next week, investors will be able to sell and purchase US-64 units through the stock exchanges, at a price determ ined by demand-supply equations.

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