The scheme has been on the drawing boards for the past three years at several stock exchanges, but none was able to put it into practice. Interestingly, Sebi has convened a meeting of the GP Gupta committee on market-making in Mumbai on Wednesday to work out the draft for introduction of market-making in the primary and secondary markets. Two top brokers of the exchange, former president Arjun Kapur and former director Rahul Malik have already been inducted as specialists for certain securities.

Speaking to The Financial Express, DSE president Ashok Aggarwal said that each market specialist would give a two-way quote compulsorily at all times. The quotes would have to be for a minimum of 500 shares or Rs 20,000 in value of the shares. There would beonly one market specialist per scrip and each member would be allowed to be a market specialist in a maximum of five securities.

"The market specialist will decide the spread subject to certain minimum criteria fixed by the exchange, depending upon the scrip and the volume of transaction. In addition to the spread, the market specialist would also get 0.01 per cent of the total turnover in that scrip for the day as commission. This would be paid by the counterparty brokers through the exchange's mechanism. For the counterparty broker, the advantage is that he was in any case making no money owing to illiquidity in the stock, which he would now be allowed to do so at a small charge", said Aggarwal.

"About eight of our brokers including some top ones have already signed up as market specialists across 25 securities. The members who opt for being a market specialist typically would have an existing portoflio of the concerned scrip. On our part, we have prescribed double the capital adequacy limit for thespecialists to ensure safety of investors. We have been working on this model of providing an exit route to investors for a long time and have finally been able to launch it," he said.

Several scrips have been languishing at below par prices and small investors have been saddled with such scrips. In an attempt to provide an exit route for such investors, Sebi has set up a committee under GP Gupta to find ways in which market making could as a concept develop in the Indian securities market.