Confirming the move, senior executive director of Sebi LK Singhvi explained that the discrepancies on account of the differences in the holidays between the leading bourses of the country lead to a lot problems in terms of price discovery. In terms of margining system, Singhvi added,"The interim anomalies within the margining system need to be thrashed out and the reference point used for the calculation of volatility margins also needs to be made more realistic. There is no need to change the existing margining system; however, some refinement can be certainly introduced."

It may be recalled that at the last meeting of the margin committeeheld on April 13, exchanges had also discussed issues of whether or not securities should be accepted as part of margins. In this regard, it was felt that some sort of standardisation is required, considering the fact that although the overall limit is prescribed by Sebi, the composition is decided by the exchanges.

In the light of the various committees formed by Sebi in the past year and the participation of stock exchanges in formulating policies for the administration and surveillance, Singhvi explained that this was the first step in paving the path for the development of `self regulatory organisations,' (SROs).

"Our objective is not only to help exchanges emerge as self regulated organisations but also ensure that we provide them constant guidance and gradually condition them into taking up the role of a semi-regulator within the exchange," said Singhvi.

According to Singhvi, SROs need to be more proactive inorder to ensure that the markets function in fair and transparent manner.

"Theintention of forming various committees for crucial decision making such as surveillance and margining related issues was to involve the stock exchanges in the entire process," added Singhvi.

Singhvi further explained that the exchanges would be in a better-off situation to ensure transparency and fair trade practices once online surveillance is in place. According to Singhvi, the Bombay Stock Exchange is likely to kick off its online surveillance by the end of May.

"The thought has been brought home that it is in the interest of the exchange and for the integrity of the markets and the image of the institution that they have a clear distinction between the policy-making and the administration aspects of the exchange. This clearly indicates that our exchanges are successfully moving towards becoming SROs," added Singhvi.