"The lesson that has been learnt from the recent events is that price manipulation can make even fairly liquid scrips illiquid which can lead to payment defaults. We have to now effectively monitor price manipulation in liquid scrips as well", Patil told The Financial Express.

"Scrips like Videocon International, Sterlite and BPL are by no stretch of imagination illiquid scrips. They have a fairly large capital base and one never thought that they could be manipulated. But that is exactly what has happened and the end result is that there is virtually no liquidity in these scrips simply because the prices have been manipulated to artificial levels", said Patil.

NSE has already begun a probeagainst two members for suspected price manipulation in these three scrips. Patil added that the exchange has an on-line surveillance system but is yet to instal the stock watch system where the system automatically throws up alerts. Currently the monitoring is done manually. The stock watch system is currently undergoing tests, said Patil.

"The decision to impose concentration margins is the best fallout of the recent developments. This will help exchanges curb price manipulation", said Patil.

As regards the fears of the payment crisis, Patil said that the settlement fund has been created for the sole purpose of reducing risk. "If one uses up to 5 per cent of the fund's corpus at a given point of time it is fine. At the same time one has to remember that in most cases the exchange has been able to recover the dues of members and hence there has been no need to declare them defaulters", said Patil.

"We have felt the need to adopt a humane approach in tackling these problems. At times brokers with goodintentions do end up failing to meet their commitments. ``If they show the conviction to bring in their dues we would prefer giving them adequate time to do so. The idea is to realise the dues through the collateral with as little loss to the broker as possible", said Patil.

Brokers bailed out

The five NSE members who have failed to bring in funds to meet their settlement dues have informed the exchange that they are likely to find someone to bail them out of the crisis.

This could be through a direct deal between the clearing corporation and the bailing out party or through a negotiated deal between the broker and the party. "One member has already informed us that he would be able to bring in the funds and we expect the others would also succeed. We do not expect a situation where even a default notice would be given to any of these five members", said NSE managing director, RH Patil.