In fact, the position limits per broker are the same for the MCFS (Modified Carryforward System) and the ALBM with an aggregate limit of Rs 40 crore and Rs 5 crore per scrip with the limits being determined on the basis of gross position for the broker. The imposition of position limits in ALBM has made building up of positions by major operators in ALBM, by shifting the surplus exposure (the excess over and above the carryforward limits allowed by BSE, CSE and others having MCFS) from one exchange to the NSE more and more difficult. This is largely responsible for transfer of the excess "load" to the informal badla market in Calcutta which is outside the exchange surveillance system.

Sebi had also clarified that these limits would apply only to trade positions which are netted against ALBM positions and not to "stand alone" ALBM positions. However, the positions of "pure securities borrowers" who withdraw shares would be included for the purpose of calculation of the aggregate and scrip limits.

The market anticipates a drop in business volumes in the ALBM segment with the introduction of position limits and there are indications of volumes dropping in the last two ALBM session to less than Rs 1300 crore in the top pivotals (which account for maximum volumes on the NSE) against over Rs 1500 crore, on an average, recorded in the immediately preceding sessions.

As for the margining system in the ALBM segment, ML Soneji, vice president (clearing and settlement) of NSE said the necessary changes in the settlement software were being effected and by next week, it would be clear when the exchange would be in a position to implement the margin system once the margining requirements are "frozen".

"Unlike BSE, which had a ready software for its twin-track system, we never had these requirements and so, the whole product has to be developed to meet the conditions prescribed by the regulator. We have obtained necessary permission from Sebi to implement these changes in due course," Soneji added. The margins on all trade positions that are to be netted against ALBM transactions shall not be less than 10 per cent. Besides, in cases where the positions netted by a member exceed Rs 20 crore, the excess over Rs 20 crore shall attract a minimum margin of 15 per cent.