Of late, there have been major worries expressed by market players who say that the ALBM of the National Stock Exchange and BLESS of the Bombay Stock Exchange have much greater risks than the earlier modified carryforward system (MCFS) which, till recently, was in practice at BSE. The essential point on which ALBM and BLESS are found to differ from MCFS is in the fact that under MCFS the badla shares were required to be mandatorily deposited with the clearing house of the exchange, while under the new systems there is no mandatory stipulation of that kind. This leads to higher risk in the system, since the shares can be used to play the market.

Confirming that Sebi was taking a serious view of market risks associated with ALBM and BLESS, Sebi chairman DR Mehta told The Financial Express:``We have taken note of the issue and will be calling a meeting of the risk management group to decide on the steps required to be taken.''

Currently, if the shares are withdrawn from the clearing house, they are subjected to margins, and the trading limits of the brokers also come down to that extent. However, despite these obvious disincentives, withdrawals of the shares do take place, which now has Sebi worrying about the motive. Besides, senior market players say this enhances market risk greatly.

``What happens if the market crashes in such a situation? There is a great element of risk if the shares are not deposited mandatorily in the clearing house,'' a senior market player commented.

Sebi is now likely to do either of two things. It can make it mandatory for the shares even in ALBM and BLESS to be deposited with the clearing house so that they are no longer used for playing the market. Another option would be to increase the margins in a way such that withdrawing the shares would invite a virtual penalty on the operator. However, the general consensus appears to be in favour of getting the shares to be deposited with the clearing house.

The argument that stocklending would be hampered if the shares are to be deposited with the clearing house may also be tackled. This can, sources said, be done in a way that the stock lender appoints the clearing house as his agent to keep the shares.

``Without this stipulation, it's like the market is going back to the days when operators would rampantly take advantage of badla shares to play the market. This is highly undesirable,'' a frontline broker pointed out.

With Sebi now taking a serious view of the issue, the coming days will see crucial modifications to the conditions of these two forward trading modules.