The trading, will however, be restricted to domestic retailers and will be made available by the end of this year or at most early next.

In an exclusive interview with The Financial Express, RH Patil, managing director of the NSE said: There is no clearance required by the NSE from the Securities & Exchange Board of India, the Reserve Bank of India, or any other watchdogs as the system (internet trading) fits into the existing rules.

NSE members, however, are required to take the necessary approvals from the Department of Telecommunications (DoT) to set up such internet trading, Patil said.

The opening of another avenue for retail trading will also reduce the NSE members' overhead costs as they save on office space and can operate with skeleton staff, Patil said.

NSE is ready to take off to the new systemanytime. This is largely because the NSE has to only make minor changes in its software to facilitate this form of trading.

``By and large there are only two preconditions: that we are getting geared up is part of it and second, the brokers must be ready''.

NSE members, however, have a lot to do. One, they have to create web pages for retailers to access them and strike deals, Patil said. Secondly, internet trading is, not as easy as it appears and NSE members will have to instill safety measures to guard against frauds, payment defaults and abuse of the system by hackers, Patil said.

``Once they are ready, we can takeoff,'' Patil said. The internet trading system will first require retail investors to register with the NSE members and each new retailer will be given a password and an identification number by the NSE member before deals are struck.

The safeguard systems will be akin to the existing ones, Patil said. ``We insist on changing their identification numbers every 10 days,'' he said. Thebrokers (NSE members) must also gear up to such safety standards, otherwise there will be a lot of fradulent deals,'' he said.

Patil feels the new system will also bring about a competitive broking rate. This is because volumes are bound to rise in the retail segment and administrative costs of brokers will stand reduced. ``Brokers will pass on this benifit to retailers. Currently brokerage on retail NSE trades average around one per cent of the value traded ``and this will fall by nearly half the current rate,'' Patil said.

The time lag of six months or so for internet trading is because of software upgradation by both the NSE and its members.

``We have just completed our Y2K compliance last week,'' Patil said. ``Though we have only minor changes required in our systems, the process will take some time and after consultaions with our IT professionals,'' he said.

But more importantly it's the readiness by the members to upgrade their systems and ``that could take even more time,'' Patiladded.

Earlier, in an attempt to boost investments by non-resident Indians, the NSE permitted its members to set up terminals overseas. In one such case, a member has already opened shop in Dubai though a tie-up with a local company there.