While the SEBI-constituted Gupta Committee has set prescriptions for minimum net worth and other requirements for clearing members, it has not gone into the details of membership requirements for trading members.

A two-tiered structure, where a few clearing members will enroll trading members with them has been prescribed. The clearing risk will be borne by the clearing members and hence the net worth requirement will be almost half of Rs 3 crore stipulated for clearing members. This raises the question about the extent to which the trading member will contribute to the settlement fund and the arrangement that he would have with the clearing member.

"We will structure the net worth requirement for trading members in a way which is found to be extremely acceptable and ensure a wide participation frommembers. Already a number of banks have evinced an interest in becoming clearing members," said an NSE source.

Sources added that there is a feeling within the NSE top brass that the arrangement between a clearing member and his trading member should be left to the concerned members and the exchange should, apart from setting some basic parameters, not get involved in this exercise.

"The whole idea of the two-tiered structure is to enable the exchange to bring an heirarchy in regulating members. The clearing members would be responsible for the acts of the trading members. Hence, it is better for them to come out with their own arrangements," said a top NSE source.

The NSE board is meeting on June 3 to clear the membership criteria for membership to the derivatives segment. The exchange proposes to set up a separate guarantee fund to be managed by the National Securities Clearing Corporation Ltd (NSCCL) for the derivatives segment. The corpus of the settlement guarantee fund would be determined onlyonce it is clear the extent to which the members would contribute to the fund and the number of members that actually join the segment.

The NSE board may also prescribe the quantum of upfront margins that would need to be deposited with the exchange to be eligible for carrying out trades.

The establishment of a separate executive council as the administrative body for regulating the derivatives segment will also be cleared by the board.