Chase Manhattan Bank said it had signed a contract to be issuing and paying agent for about half of Sears, Roebuck and Co.'s commercial paper.

Under the contract with Sears Roebuck Acceptance Corp., Chase will handle all the retailer's electronic issues.

The Sears financing unit is converting from physical issuance of notes to book entry.

Commercial paper is used by corporations as a method of short-term borrowing. A small number of issuing and paying agents clustered in downtown Manhattan transport huge quantities of paper around in armored cars. About $530 billion is outstanding.

Depository Began Program

In October 1990, the Depository Trust Co., a cooperative owned by the securities industry, inaugurated a paperless program.

That enabled banks and other corporations to begin sending the cooperative electronic messages describing transactions.

About 40% of the market has been converted to electronic book entry.

Paperless issues are expected to reduce costs in a market that is beset by narrow profit margins. Some some banks have gotten out of the business.

Sears is one of the top issuers of commercial paper, with about $10 billion outstanding. Chase is one of a handful of issuing and paying agents with a direct link to the Depository Trust's mainframe computer, enabling Chase to automate issuing and payment.

Banks must still be able to generate paper documents until September of this year, when the cooperative expects to turn on the switch at a backup site for its computer processing.

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