Citing the various benefits which could accrue to the broking fraternity and the investors at large with banks taking up this new role, Patil emphasised on the wide acceptance of the two-stage membership an essential feature of derivatives trading. Speaking at a conference organised by Invest India, Patil stressed on the need for the acceptance of the two-tier membership -- trading member and clearing member in the case of cash market also.

However, Deena Mehta, director of BSE held a contrarian view in the light of the working of the public sector banks and their relationship with the broking fraternity.

Citing the example of France, where 99 per cent of the market orders are routed through the banks and only 19-20 brokers are functional, Mehta focussed on the need forIndian banks to take up the new role, especially in the dematerialised environment.

The discussions also centered around whether it is the right time to introduce derivative trading in India. ``There is nothing like a stage of development, even if it is poor country, derivatives can be traded,'' explained Patil. Mehta also highlighted that the derivative products helps link the future to the present, hence the benefit to the investors. BSE is likely to submit its proposal for setting up a derivatives segment to the SEBI early next week.

Shifting his focus from futures derivatives to bond markets, Patil added ``Future lies in bond market.'' While Andrew Wong, the representative of Warburg Dillon Read, cited the cases of Malaysia and Korea where due to the absence of the basic requirements such as timing of the launch of derivatives, effective communication and adequate margining systems led to a major failure, Mehta explained that the concept of `know-your-client' needs to be strongly adhered.

Mehta alsostressed on the need for creating an exchange within a broker's office. ``In the absence of adequate risk management mechanism in broker's office, derivatives could fail in India as well, despite adequate precautions taken by exchange and SEBI,'' explained Mehta.