In a notification to stock exchanges issued recently, the Securities and Exchange Board of India (SEBI) said ``the eligibility criteria for multiple membership as stipulated in Government of India Circular No: F.No. 1/26/SE/91 dated August 12, 1991 at (i) (a), shall not be applicable at all, provided that such member (whether corporate or individual), has been admitted to SE membership in accordance with Rule 8 of the Securities Contracts (Regulation) Rules, 1957.

The move is expected to lead to members of regional exchanges seeking membership of leading exchanges like Bombay and National stock exchanges, thus reducing further the importance of RSEs, which were already struggling to find a means of survival by forging alliances with major exchanges. Incidentally, the GoI circular, which inter alia stipulated that a member should have operated his membership for a period of at least five years before seeking membership to other stock exchanges, was issued before Sebi became the de jure capital market regulator.

Sebi relaxed this provision of the GoI circular by declaring that the criteria shall not be applicable to corporate members of stock exchanges, provided such entities meet the networth criteria separately for all the exchanges in which they would operate, through a circular issued in June 1994. Since 1991, the membership cards of SEs have commanded high price tags with many interested parties trying to get membership of other exchanges. In some cases they have led to many of them entering into tie-ups for trading on multiple exchanges, a senior market operator said.

On the contrary, a senior official of an exchange was of the view that there was no reason to think the move would lead to a sudden and huge demand for multiple membership, as many of them have either floated new companies or become corporate members to seek membership of NSE, when it was floated.

Already 80 per cent of the 900 members of the NSE were corporate ones and only fewer than 200 were individual members. Besides, the strength of individuals out of the over 9,000 stock exchange members of the 22 bourses registered with Sebi is not so significant, market sources said. "This might be a move to provide a level-playing field for individual members with corporate ones," the marketmen said. Rule 8 of the Securities Contracts (Regulation) Rules 1957 specifies who would not be eligible for membership of a stock exchange.