Clearing members using investors' shares for proprietary trades is a violation of the stock exchange regulations. Sources said that Sebi is still in the process of checking the extent of such violations and is depending on the audits conducted by the stock exchanges for the requisite data feed.

Sebi is, however, likley to run into a lot of difficulties in its quest to pin down the errant members. According to sources in National Securities Depository Ltd (NSDL), finding out whose shares the brokersare trading in would be a hard job and some of the brokers could be indulging in these sort of trades with the investors' tacit consent. "One can view it as a sort of incentive for the brokers," they pointed out.

Sebi or the stock exchanges can take action against such violations only if the investors complain against it. So if the investors themselves have no problems with brokers playing around with their shares, "then what can one do?" was the question posed by officials.

In between all this nitpicking, some innocent investors are also likely to be trapped and this is where Sebi intends to step in with the help of the stock exchanges and the depositories themselves. Members who make free use of shares in pool accounts also have to be answerable at the end of the day - there are ledgers which have to be maintained, containing delivery and other trade details of their transactions.

Clearing members also have to furnish to SEs details about the break-up of the balances in their accounts, deliveriesmade, deliveries taken, shares transferred to clients, contract note details among others. In case there has been any violations by brokers, it leaves a trail which will show up in such intensive scrutiny. Besides, "manipulation of multiple pool accounts would be a difficult proposition," sources said.

In order to solve the problem of execution of corporate action (declaration of dividends, bonus issues and so on), it may be recalled that Sebi had told clearing members to take the responsibility for these on behalf of the investors till such time that shares are transferred in the investors name.

NSDL officials said that suitable modifications would have to be made in their software in order to accomodate this as members would have to take charge and maintain the corporate benefits under a separate account, on behalf of the clients.