The meeting comes in the wake of massive sales by foreign institutional investors post-budget and the recent wild fluctuations in the market. Market sources said that the Sebi chairman is expected to inform the finance ministry about the feedback the regulator has received in its meetings with representatives of top FIIs including the head of Templeton's emerging markets, Mark Mobius, over the past two days.

The BSE convened a meeting of its board on Wednesday to study the financial conditions and the outstanding positions of about seven brokers. It was however, decided that only four brokers are in trouble which if not resolved by Thursday morning, could lead to their suspension from trading. According to sources, two of these brokers are operating on NSE as well.

The general feedback which Sebihas received from FIIs, which are according to them has led to the fall, are the failure of the budget to address capital market concerns, the fall out of the nuclear tests and the south-east-Asian crises are the main reasons for the flight of FIIs, which has seen close to Rs 500 crore worth of net sales since the budget.

In addition to this, Sebi is also expected to inform the finance ministry about the safety of the market and the steps that have been taken to ensure this. The regulator had on Monday met the NSE and BSE top brass and had spoken to other smaller exchanges. It was felt that there was no current danger of widespread defaults in the market owing to stringent monitoring of exposure level by exchanges.

However, imposition of special margins on short sales, was one of the points that came up for discussion and this was not ruled out at a later date. And even though the market was agog with rumours that several brokers had defaulted, Sebi sources said that the data that the regulator hadcollated from stock exchanges did not reveal huge short positions. Sources pointed out that the watchdog does not intend to impose special margins on short sales immediately. There were rumours that the BSE may impose such margins as it had come under tremendous flak from brokers, for not having done this till now.

Absence of factual information from either of the exchanges on the total exposure the defaulting brokers have made at the bourse and whether this could lead to any functional problem left the local players in a confused state.

Financiers are reluctant to bail out such brokers since the securities they can offer as guarantee are essentially the big bull favourite stocks which have recorded considerable price erosion.

There were rumours that some brokers had been asked by the exchange to switch of their terminals as they had overshot their exposure limits. At the NSE, about 12 terminals were automatically shut off as these members had exceeded their exposure limits.

"There are no defaults.The settlement has just been concluded and it has gone of well. It was just the first day of the settlement. There is a turbulence in the market but the situation is in control", said a top NSE official, denying rumours that at least four members had been declared defaulters by the bourse.

``We do not perceive any payment crisis in the Delhi Stock Exchange. We had got wind of the high outstanding positions in certain counters earlier in the week and slapped ad-hoc margins on these scrips -- BPL was one counter where the ad-hoc margin was imposed. In fact, we even looked at the exposure of brokers and wherever we felt uncomfortable with the position, the ad-hoc margin was imposed,'' said Deepak Chowdhry, president of Delhi Stock Exchange.