MUMBAI, June 11: A large number of brokers having dual membership of National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) have criticised the proposed move by NSE to ask its members to furnish personal guarantees.

On the other hand, NSE authorities claim that already more than 50 brokers have furnished the indemnity bond which is seen as the bourse authorities as a measure to curb the entry of fake shares into the market.

Interestingly, a number of domestic brokers are waiting to see how foreign and institutional brokers respond to NSE's directive. Some domestic brokers say that they are ready to pay only if these members sign the bond.

It is, however, clear that the June 15 deadline set by NSE will not be met by several brokers. Even foreign brokerage houses have been forced to communicate the decision to their headquarters and are awaiting a nod from there. This is expected to take some time.

``The whole idea of being a corporate is that such an entity has limited liability. So where is the question of accounting for unlimited liability. There is a legal twist to this. The articles of association of corporate entities will need to be specially amended for this purpose,'' said a Mumbai-based broker.``NSE is being too harsh on its corporate members. As it is, being corporate entities, we have to pay higher tax. On top of it, NSE charges higher for a corporate membership. And then it seeks indemnity bonds imposing unlimited liability from us. If this is the case, NSE should refund our corproate membership fees and let us function as individual members. That would naturally be totally against the movement to get all the members of all bourses corporatised,'' he adds. ``BSE's stand of not letting the members with common membership with the NSE supply such an indmenity bond also needs to be examined legally. In any case, we are determined not to supply any such bond. The June 15 deadline means nothing. The association is meeting on Saturday and we will see what can be done then,'' states another defiant Mumbai-based broker.

``Even if one has genuine clients how can one guarantee the actions of the clients in the future. A client might receive some tainted shares from another exchange and faced with no alternative might push these shares through us. It is not possible for us to stand guarantor for the actions of a client,'' says another broker.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.