According to some, small cap stocks which can be easily manipulated should not find a place in the Index as erratic price fluctuations in these stocks could lead to similar movements in the Index, which is the barometer for the overall market movement.

"Speculation is the key to the growth of any cash market, which even eminent foreign derivative players have agreed upon," said a BSE broker.

"In the first place we fail to understand why did SEBI appoint a committee under the chairmanship of JS Varma to introduce modified badla, and now on account of the failure of BSE to take corrective and timely action against short-sellers, the entire market will have to pay for it," he expressed.

However, according to Bombay StockExchange president JC Parekh, the move is aimed at putting an end to attempts made by a section of brokers to corner shares which proves to be unhealthy for the market as a whole.

"The SEBI move is bound to put a check on the concentration of speculative business at a particular counter and the obvious fall out in the absence of corrective risk management measures," explained a source.

Market experts said that speculators both local and foreign would now concentrate on heavy weight stocks which have a huge equity base.

"If a select group of operators want to build excess positions in a particular counter and if the exchange in the absence of an effective surveillance mechanism allows such brokers to do so, they should be ready to bear the burden of the extra cost levied by SEBI," explained a source.

A section of brokers who have time and again reminded the exchange authorities about the loopholes in the current badla system, however, sadly commented that SEBI's initiative has come after the problemshave taken a toll both on the financial health of the exchange and the indices.