SEBI chairman DR Mehta told a seminar on "Managing Derivatives" organised by the National Stock Exchange and British Invisibles (an association of financial- services firms in the United Kingdom) that had the board met on April 25, the report would have been cleared on the same day. However, the meeting has been re-scheduled owing to the unavailability of two board members. It has thus been postponed to a later date.

"We do not expect any substantial change in the report. There will only be a few changes here and there," he said.

Mehta said it was his view that derivatives should not only be restricted to institutions as a number of experts had pointedout that this might not be feasible. "We must also see that very small investors do not come into the segment, which can be risky. Hence institutions and high net-worth individuals should only be allowed to trade in these instruments," he said.

He said the cash market had strengthened substantially over the past few years, and SEBI's latest efforts to give a boost to dematerialisation had also been successful. He said the SEBI committee on depositories would expand the list of companies of compulsory trading in demat shares by institutions in its meeting on Friday.

According to Securities and Futures Authority chairman Nicholas Durlacher, a sound working cash-market, which is a pre-requisite for the introduction of derivatives, exists in the country. He said it is imperative to test the participants before allowing them to trade in derivatives.

Durlacher pointed out that even in London, the introduction of derivatives trading brought about major reforms in the underlying cash-market system, like bettermargins and had paved the way for rolling settlements.

NSE deputy managing director Ravi Narain said that the same would happen in India too. He pointed out two examples of how this would happen. The first pertains to margins. "In the cash market, margins are on a net basis, while in the derivatives market these would be collected on a gross basis. Needless to say, this would have an impact on the collections of margins in the cash market too", said Narain.

Similarly, in the derivative segment there would be a clear distinction between trading members and clearing members. As the risks are more at the settlement stage, the clearing members would be better endowed in terms of networth, while the trading members would settle their trades through these clearing members. This trend will spill over to the cash market as well.