Top government officials said that BSE's failure to implement the Sebi directive to limit a member's gross exposure to 20 times his base minimum capital and additional capital is being viewed seriously and is expected to find a mention in the investigation report.

Sebi had, in January this year, issued a directive to all stock exchanges stating that `the upper limit for the gross exposure (aggregate of scrip wise outstanding net purchases plus net sales) of the member broker of the stock exchange has been fixed at 20 times of his base minimum capital and additional capital. The exchanges are free to set stricter limits. This is in addition to the present capital adequacy and other margin requirements'.

BSE, however, implemented this only in July. In themeantime, the exchange was rocked by a payments crisis in June this year. Even in doing so, it decided to exclude carry forward business out of the definition of gross exposure in terms of calculating the 20 times limit, and sought a clarification from Sebi on the same.

Sebi is yet to give any clarification in the matter. Sources said that the Sebi directive in this regard was very clear in defining what was to be included in calculating the gross exposure limit and hence there was no real reason for the regulator to get back to the exchange.

It is felt that the exchange should have accounted for carry forward business as well till such time it did not receive permission to exclude this. ``Merely seeking a clarification and till this is received not implement a directive does not appear to be correct. After all even Calcutta and Delhi stock exchanges are including carryforward transactions in calculating the member's gross exposure,'' said a government source.

Interestingly, BSE has now startedaccounting for carry forward transactions under the 20 times limit. ``We are accounting for carry forward business within the gross exposure limit of 20 times,'' is all BSE executive director, R C Mathur, was willing to say, when contacted.

Sources in BSE said that the exchange's decision could have been prompted by some feelers from the regulator to this effect.

This could not be confirmed with Mathur. Sebi officials declined to comment on the contents of the investigation report. Sebi is investigating the reasons for the payments crisis witnessed at the country's two largest exchanges, BSE and the National Stock Exchange (NSE), in June this year.The investigation is looking into all aspects of the crisis including the subsequent bail-out of some BSE brokers. Immediately after this, a serious mismatch in delivery of shares was witnessed at the clearing house of the exchange. This aspect, too, is being probed.

The Sebi investigation is expected to be completed shortly. The matter has already reached theparliament as well as the Mumbai High Court. In the first case, a few MPs had raised concern on the payments crisis and sought a status report. In the second case, an investor has filed a petition before the court seeking directives to Sebi to probe the matter.

The court has asked Sebi to expedite its investigations and submit the findings of the same to the court.