This would become applicable from the next settlement. The decision follows a meeting of the risk management group of the regulator. ALBM is available at the National Stock Exchange and BLESS at the Bombay Stock Exchange.

The Financial Express had, on January 25, reported that Sebi was going to crack down on the misuse of the two schemes, since the shares were allowed to be withdrawn from the clearing house and that could enhance market risk.

Though it was indicated at the meeting that such withdrawal amounts were not significant, generally it was felt that despite its present status, there was a possibility of a misuse of this facility impacting the safety of the market. On the other hand, a view was also expressed that by closing this facility, the stock lending scheme may not be encouraged.

Hence, apart from the decision to have the ALBM and BLESS shares to be mandatorily deposited with the clearing corporation/clearing house, Sebi has also decided that a separate scheme would be designed to encourage securities lending and borrowing. This would be in addition to the existing scheme of stock lending. One scheme which could be examined is the possibility of stock exchange/clearing corporation/clearing house of the exchange directly borrowing on behalf of the member with sufficient collaterals. Explaining the decision, Sebi chairman DR Mehta said:``This would ensure added safety against any possible misuse and it obviously would be of help to improve investor confidence''. Sebi executive director Pratip Kar said:``We have approved these schemes earlier, but there were some concerns expressed regarding the withdrawal of shares by members. This has now been addressed.''

Among other decisions, Sebi has mandated that the client code at the order entry level would be compulsory at the end of the brokers. An order not containing client codes would not be accepted by the trading system of the stock exchanges. In case the investor is the client of the main broker, the code of the investor is provided. In case the orders are routed through the sub-brokers, in most cases the code of the sub-brokers is put in the system.

Considering that a large volume of business is routed through the sub-brokers, it was important that the client code is also entered at the order entry level by the sub-broker for their clients. It was therefore decided that the client code number would be given by the sub-broker while acting on behalf of a client at the order entry level. This will be mandatory from February 28, 2001.

It was also decided that the continuous net settlement (CNS) facility would be available in the voluntary rolling settlement segment of the stock exchanges in all the stocks which have the facility of ALBM/BLESS/modified carryforward system in those stock exchanges in the account period settlement. Sebi has already allowed the facility of CNS in compulsory rolling settlement in 15 B1 group stocks. This would be implemented by BSE and NSE by March 1, 2001. Other stock exchanges are also in the process of developing the necessary software for CNS.

Also, Sebi has decided that in order to select stocks for ALBM/MCFS the parameter of minimum floating stock would be applied. This would be done in a way that: (1) at least 25 per cent of the company's paid up capital must be held by non-promoters (2)in case the non-promoter holding is less than 25 per cent, the market capitalisation of non-promoter holding of the company's capital should be at least Rs 100 crore, subject to a minimum non-promoter holding of 10 per cent of paid-up capital.