The Bombay Stock Exchange has shifted nearly 700 scrips to the Z group or the trade-to-trade segment due to non-compliance with the exchange's listing agreement.

In a notice, the BSE said that 578 companies have been shifted to the Z group or the trade-to-trade segment with effect from September 10, 2003, while another 112 will be shifted to the Z group with effect from September 12, 2003.

These measures form part of the BSE's surveillance steps. The exchange has also revised or imposed special margins on 113 scrips, effective from Monday.

According to the exchange notification, special margins have been revised keeping in view of the closing price of the scrip on the last trading day.

These margins will be imposed on the basis of member-wise gross purchase or sales position or client-wise net position.

The market has been agog with news of a substantial number of companies being shifted to the Z group since many of them are dividend paying companies.

Dealers said that putting such a large number of scrips in the Z category could hurt the market sentiment, especially when the equity markets are on a recovery path.

The BSE said the move is in the interest of the investing public. The National Stock Exchange has also decided last week that trading in 135 securities would take place under the trade-to-trade segment with effect from September 10, 2003, as a risk containment measure.

These securities will not be available in the rolling segment with effect from that date.

The companies, which have been transferred to the trade-to-trade segment on the BSE include Arvind Remedies, Autoriders Finance, B S Appliances, Bajaj Plastics, Balaji Distilleries, Bell Ceramics, Bharat Gears, Birla VXL, BPL Engineering, Core Healthcare and CyberTech Systems.

Interestingly, high priced stocks including Electrosteel Casting, which traded at Rs 303.70 last Friday, and Rajesh Exports, traded at Rs 117.15 last Friday, have been transferred to the trade-to-trade segment.

Normally exchanges transfer stocks to this segment, which have not established connectivity with both the depositories as per the regulator's directive.

The list of these securities is notified by the Securities and Exchange Board of India from time to time.

The measure is also to bring compulsory demat trading in such securities and to promote "safety and efficiency'' in the capital markets.

Among the companies in which the special margins have been revised are Aftek Infosys, Adani Exports, Geometric Software, Hughes Software and Mastek.