On risk containment measures proposed by Sebi, Gehrotra said recently in Jamshedpur that the initial margin would be collected in advance to cover 99 per cent of the `value at risk'.

Funds deposited with the clearing corporation at any point of time should be more than the value at risk of the open position of members. Besides, the exposure limit would be calculated on gross basis and netting between broker/client or inter-client positions would not be allowed as is the case in the cash market, Gehrotra explained.

In addition, daily settlement obligations shall be collected in cash before commencement of trading on the next day.Gehrotra made it clear that Sebi would ensure that the clearing corporations had adequate risk containment systems and capacity to monitor overall position of members across all segments on real-time basis.

On capital adequacy of members and deposit requirements, Sebi has proposed that clearing members should have a net worth of Rs 3 crore and would have to deposit Rs 50 lakh with the exchange/clearing corporation. However, for trading members, no specific limits have been prescribed.

Senior sources in NSE however indicated that the deposit requirements have been substantially diluted from levels originally fixed when potential members were asked to furnish a deposit of Rs 50 lakh and a bank guarantee of another Rs 20 lakh.

It is now learnt that for trading members the deposit has been scaled down to Rs 8 lakh. The deposit requirement for clearing members, however, remains unchanged.

In response to NSE's call in 1996 for membership in derivatives segment, nearly 220 applications were received. Themoney received by NSE has already been refunded to the applicants, sources disclosed.

At present, there are two applications pending with Sebi from BSE and NSE for starting derivatives trading. A senior executive of the BSE, A B Rastogi, pointed out that derivatives would trigger reforms in the cash market.

Rastogi added that the guidelines for derivatives would lead to collection of margins on gross basis and even financial institutions would have to pay margins on their daily trades. In addition, margins would be compulsorily collected from clients upfront by their brokers.