The NSE board cleared the membership requirement in its meeting held on Wednesday and will now seek approval from SEBI for kicking-off derivatives trading.

A trading members will have to provide an interest free deposit of Rs 8 lakh and an annual subscription charge of Rs 1 lakh for trading in derivatives.

In addition to this it will furnish a bank guarantee of Rs 10 lakh to the clearing corporation as contribution to the settlement fund. Each clearing member will provide Rs 25 lakh as collateral security to the clearingcorporation. All trading members operating through the clearing member will contribute Rs 10 lakh each to the exchange. The clearing member will also provide for a Rs 25 lakh interest free security deposit with clearing corporation. Even though every member will be technically eligible for becoming a trading member, it will be left to the discretion of the exchange to allow membership to the derivatives segment.

"The idea is to allow as many members as possible to participate in derivatives trading. We have therefore set a very low networth requirement. Similarly, the transaction charge has been kept very low to encourage greater participation from the market", said NSE deputy managing director, Ravi Narain. The exchange has also decided to allow all banks and SEBI registered custodians to become clearing members subject to the same deposit and fee structure for existing members wanting to be clearing members.

The exchange has also given an option to the members of the wholesale debt segment to opt forthe futures and options segment, if they so desire. Several members have not been too happy with the trading in the WDM and have been wanting to exit the segment. The necessary adjustments will be made in the fees already provided by them and the amount they would need to bring in afresh.

Any amount lying to the credit of the member after appropriation as above shall be utilised by the member for meeting margin calls or additional base capital for enhanced exposure. The entry norms and deposit amounts for the other sub-segments of the futures and options segment are expected to be announced later.

NSE net falls 77% to Rs 5.37 cr

The NSE has witnessed a steep 76.87 per cent fall in its net profit for 1997-98. The exchange has recorded a net profit of Rs 5.37 crore as against Rs 20.49 crore in the previous year. It has for this reason cut dividend to 10 per cent from the previous year's figure of 15 per cent. The fall in profits has been attributed to increase in expenditure due to increase indepreciation on additions and upgradations to the computer and telecommunications systems, increase in repairs and maintenance expenses and V-Sat shifting charges necessitated by snags in the satellite. The average daily traded volume during the year was Rs 1,517 crore while the total turnover on the demat segment was Rs 350 crore. The corpus of the clearing corporation stood at Rs 424 crore as on March 31.