This is against the corporation's request to the exchange for collecting margin in the form of bank guarantee. Confirming the move executive director of BSE, RC Mathur said, "We are open to the idea of accepting margin partly in cash and partly in the form of bank guarantee. However, the bank guarantee would be collected upfront, and adjusted at the pay-in day if cash is deposited with the exchange".

When contacted, the managing director of SHCIL, BV Goud explained that he was still not aware of the exchange's decision on collection of margins.Interestingly, according to Sebi sources, the custodian in its application for internet based trading had sought exemption from margin payment.

However, the regulator decided not to offer this concession since under the new setup the custodianwould be responsible for the settlement of trades conducted on behalf of retail investors and not institutional investors.

Similarly another issue which was discussed at length by the custodian and the exchange was on the concept of know-your-client. "Historically the corporation operates on the exchange via a particular custodian code, which when identified is exempted from margin payment as it is institutional business. Now that SHCIL has decided to act as super broker and execute orders on behalf of retail investors they will be given different codes, which would automatically attract all the margins imposed by the exchange," explained a senior BSE director.

The corporation's plans of a super broker has been based on a connectivity between brokers, bank, investors and SHCIL. Unlike internet-based trading offered by broking houses in the US, the corporation's model has been based on a net-work connecting clients, stock brokers, bank and SHCIL. Technically the trade order will be placed on the SHCILsite, which will be cross checked with the bank for cash balance and order will be passed on to the broker for trade execution. The entire process is automated and will take about 10 minutes. The net based trading is an extension of the unique kiosk model that SHCIL offers to general investors. The trading is however restricted to dematerialised securities and will be cash based. The corporation has also entered into an agreement with two Mumbai based stock broking firms for connectivity. A client will be able to trade on the site only if his broker is connected to SHCIL for online trade execution.