The electronic settlement system of share transactions started operation on January 24 with only one listed company, Square Pharmaceuticals Limited, and a little volume of shares were transacted on the first day.

The present settlement procedure takes five trading days to settle a transaction which sometimes hurts investors due to price fluctuation. When more companies will come under the system, the settlement time should come down.

M Habibus Samad, managing director of Central Depository Bangladesh Ltd (CDBL), operator of the scripless trading system, said the existing T+5 settlement system should be transformed into T+3 for quick settlement under the CDS.

"But before going for T+3, the current payment mechanism needs to go under automated clearing system for the benefit of traders," he said.

Currently Bangladesh Bank has 'same-day clearing' arrangement for payment against cheques of above Tk 5 lakh in some select bank branches in Dhaka city and it takes three days to clear a cheque for below the amount.

As most of the share transactions involve little amount of money, the same-day clearing system does not help the traders in capital market, Samad said.

Anwar Hossain, a director of Dhaka Stock Exchange (DSE), said the settlement time should be brought down to three days to take full benefits of the depository.

"But it will take time as majority of the listed companies need to come under the CDS which may require several months, even years," he added.

DSE Chief Executive Officer Salahuddin Ahmed Khan also said time cut in settlement is possible but it depends on improvement in payment system.

The much-awaited settlement of share trading under CDS started with only 2,851 dematerialised shares of Square Pharma. On the first day, only 106 shares of the company were transacted in two bourses.

So far more than 5.31 lakh shares, including 5.24 lakh belonging to sponsor shareholders and 7,158 belonging to IPO (initial public offering) participants were de-matted. The company has 7.58 lakh IPO shares involving about 35,000 individual investors.

The de-matting process is slow because, market analysts said, the investors are observing and monitoring the market after the launching the new system.

As the CDS will eliminate all paper share certificates and turn them into electronic ones, there will be no risk of fake, soiled or lost shares.