Membership

Administration 2
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 Membership Administration 2
The trading in NSE has a three tier structure-the trading platform provided by the Exchange,
the broking and intermediary services and the investing community. The trading members
have been provided exclusive rights to trade subject to their continuously fulfilling the
obligation under the Rules, Regulations, Byelaws, Circulars, etc. of the Exchange. The trading
members are subject to its regulatory discipline. Any person can become a trading member
by complying with the prescribed eligibility criteria and exit by surrendering trading
membership without any hidden/overt cost. There are no entry/exit barriers to trading
membership.

Eligibility Criteria
The Exchange stresses on factors such as corporate structure, capital adequacy, track record,
education, experience, etc. while granting trading rights to its members. This reflects a
conscious effort by the Exchange to ensure quality broking services which enables to build
and sustain confidence in the Exchange's operations. The standards stipulated by the
Exchange for trading membership are substantially in excess of the minimum statutory
requirements. The exposure and volume of transactions that can be undertaken by a trading
member are linked to liquid assets in the form of cash, bank guarantees, etc. deposited by
the member with the Exchange as part of the membership requirements.
The trading members are admitted to the different segments of the Exchange subject to the
provisions of the Securities Contracts (Regulation) Act, 1956, the Securities and Exchange
Board of India Act, 1992, the rules, circulars, notifications, guidelines, etc., issued there
under and the byelaws, Rules and Regulations of the Exchange. All trading members are
registered with SEBI.

Trading Membership
A prospective trading member is admitted to any of the following combinations of market
segments:
• Wholesale Debt Market (WDM) segment,
• Capital Market (CM) and the Futures and Options (F&O) segments,
• CM Segment and the WDM segment, or
• CM Segment, the WDM and the F&O segment.

In order to be admitted as a trading member, the individual trading member/at least two
partners of the applicant firm/at least two directors of the applicant corporate must be
graduates and must possess at least two years' experience in securities markets. The applicant
for trading membership/any of its partners/shareholders/directors must not have been
declared defaulters on any stock exchange, must not be debarred by SEBI for being associated

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 with capital market as intermediaries and must not be engaged in any fund-based activity.
For the F&O segment, at least two dealers should also have passed SEBI-approved
certification test for derivatives. In case of corporate applicant, the minimum paid up capital
should be Rs. 30 lakh and the dominant promoter/shareholder group should hold at least
51% (40% in case of listed companies) of paid-up equity capital of such corporate entity.
The net worth required for trading members on CM & F&O Segment is 100 lakh, however,
a net worth of Rs. 300 lakh is required for members clearing for self as well as for other
trading members.

Clearing Membership
The trades executed on the Exchange may be cleared and settled by a clearing member. The
trading members in the CM segment are also clearing members. In the F&O segment, some
members, who are registered with SEBI as self-clearing members, clear and settle their own
trades. Certain others, registered as trading member-cum-clearing member, clear and settle
their own trades as well as trades of other trading members. Besides this, there is a special
category of members, called professional clearing members (PCMs), who do not trade but
only clear trades executed by others. This means that some members clear and settle their
trades through a trading member-cum-clearing member or a PCM, not themselves. The
members clearing their own trades or trades of others, and the PCMs are required to bring
in additional security deposits in respect of every trading member whose trades they undertake
to clear and settle. The requirements of trading membership and clearing membership are
presented in Tables 2-1A and 2-1B.

Growth and Distribution of Members

As at end March 2006, the Exchange had 940 members. A large majority (90.64%) of them were
corporate members, and the remaining, individuals and firms. There were 933, 68 and 767 members
in the CM, WDM and F&O segments respectively. The growth of membership on NSE is presented
in Table 2-3. The distribution of trading members on the Exchange as at end March 2006 is
presented below:

Distribution of Trading Members (as on March 31, 2005)

CM WDM CM & CM, WDM CM & F&O Total
Segment Segment WDM & F&O Segment
Segment Segment
Corporates 127 7 11 50 657 852
Individuals 13 0 0 0 28 41
Firms 15 0 0 0 32 47
Total 155 7 11 50 717 940

A total of 11,465 (1,211 corporates, 838 partnership firms and 9,416 individuals) sub-brokers
were affiliated to 510 trading members of the Exchange on March 31, 2006.

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 Transaction Charges
In addition to annual fees, members are required to pay transaction charges on trades
undertaken by them. They pay transaction charges at the rate of Rs. 3.5 for every Rs. 1 lakh
of turnover in the CM segment, at the rate of Rs. 2 for every Rs. 1 lakh of turnover in the
Futures contract segment and at the rate of 5 paise per Rs. 1 lakh gross traded value up to
Rs. 25000 crores and at the rate of 2 paise per Rs. 1 lakh gross traded value above Rs. 25000
crores subject to minimum of Rs. 10000 per annum in the WDM segment. For the
transactions in the Options sub-segment the transaction charges are levied on the premium
value at the rate of 0.05% (each side).

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Table 2-1A: Eligibility Criteria for Memberhip

(All values in Rs. lakh)

Particulars CM and F&O Segment CM and WDM Segment WDM Segment CM, WDM and F&O Segment

Constitution Individuals/Firms/Corporates Corporates Corporates Corporates

Paid-up capital 30 30 30 30
(in case of corporates)
Net Worth 100* 200 200 200*
Interest Free Security Deposit (IFSD) 125** 250 150 275**
Collateral Security Deposit (CSD) 25** 25 Nil 25**
Annual Subscription 1 2 1 2
Education Individual trading member/ two At least two directors should At least two At least two directors should be
partners/two directors should be be graduates. directors should be graduates. Dealers should also have
graduates. Dealers should also graduates. passed SEBI approved certification
have passed SEBI approved test for derivatives and Capital Market
certification test for derivatives (Basic or Dealers) Module of NCFM.
and Capital Market (Basic or
Dealers) Module of NCFM.

Experience Two year's experience in securities market

Track Record The Applicant/Partners/Directors should not be defaulters on any stock exchange. They must not be debarred by SEBI for being
associated with capital market as intermediaries They must be engaged solely in the business of securities and must not be engaged in any
fund-based activity.

* No additional networth is required for self-clearing members in the F&O segment. However, a networth of Rs. 300 lakh is required for members clearing for self as well as for other
trading members.
** Additional Rs. 25 lakh is required for clearing membership (self-clearing member/members clearing for self as well as for others) in the F&O segment. In addition, a member clearing
for others is required to bring in IFSD of Rs. 2 lakh and CSD of Rs. 8 lakh per trading member he undertakes to clear in the F&O segment.
 Table 2-1B: Requirements for Professional Clearing Memberhip
(All values in Rs. lakh)

Particulars CM Segment F&O Segment CM and F&O Segment

Eligibility Trading Member of NSE/SEBI Registered Custodians/Recognised Banks

Net Worth 300 300 300
Interest Free Security 25 25 34
Deposit (IFSD)
Collateral Security 25 25 50
Deposit (CSD)
Annual Subscription 2.5 Nil 2.5

** The Professioanl Clearing Member (PCM) is required to bring in IFSD of Rs. 2 lakh and CSD of Rs. 8
lakh per trading member whose trades he undertakes to clear in the F&O segment and IFSD of Rs. 6 lakh
and CSD of Rs. 17.5 lakh (Rs. 9 lakh and Rs. 25 lakh respectively for corporate Members) per trading
member in the CM segment.

Table 2-3: Growth and Distribution of Members

Month/Year Trading Member Total* Professional

(end of period) CM Segment WDM Segment F&O Segment Clearing Member

Mar-95 348 88 -- 353 --

Mar-96 890 104 -- 895 --
Mar-97 1,013 111 -- 1019 --
Mar-98 964 108 -- 970 --
Mar-99 918 99 -- 924 --
Mar-00 883 94 -- 892 --
Mar-01 973 90 340 980 13
Apr-01 969 90 339 975 13
May-01 969 90 339 975 13
Jun-01 965 88 346 971 13
Jul-01 967 88 347 973 13
Aug-01 962 89 374 968 13
Sep-01 959 88 379 965 13
Oct-01 950 88 377 956 13
Nov-01 941 88 396 947 13
Dec-01 937 88 414 943 13
Jan-02 936 88 440 942 13
Feb-02 934 89 453 942 13
Mar-02 928 88 484 936 13
Apr-02 927 89 502 935 13
May-02 926 88 501 934 13
Jun-02 920 86 449 928 13
Jul-02 918 85 521 926 13
Aug-02 914 84 532 921 13
Sep-02 912 84 532 919 13

Contd...

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 Contd...

Table 2-3: Growth and Distribution of Members

Month/Year Trading Member Total* Professional
(end of period) CM Segment WDM Segment F&O Segment Clearing Member

Oct-02 907 82 540 914 13

Nov-02 899 82 539 906 13
Dec-02 894 81 544 901 14
Jan-03 891 81 546 899 13
Feb-03 889 79 551 897 13
Mar-03 887 78 553 895 13
Apr-03 882 77 561 890 13
May-03 874 77 566 882 13
Jun-03 870 77 568 879 13
Jul-03 863 75 568 872 13
Aug-03 859 75 568 869 13
Sep-03 860 75 574 871 14
Oct-03 860 75 578 871 14
Nov-03 857 75 579 868 14
Dec-03 860 75 583 871 14
Jan-04 861 76 584 872 14
Feb-04 861 76 588 872 16
Mar-04 862 78 589 874 16
Apr-04 860 75 595 872 16
May-04 860 75 599 872 17
Jun-04 863 75 614 874 17
Jul-04 865 75 621 876 17
Aug-04 866 75 621 877 17
Sep-04 866 74 620 876 17
Oct-04 869 76 625 880 17
Nov-04 868 74 628 879 17
Dec-04 867 74 634 878 17
Jan-05 872 74 646 883 17
Feb-05 876 75 652 886 16
Mar-05 881 75 661 891 17
Apr-05 884 75 667 894 17
May-05 886 75 676 896 17
Jun-05 885 75 679 895 17
Jul-05 883 74 679 893 16
Aug-05 887 71 695 896 17
Sep-05 892 70 702 899 17
Oct-05 900 70 704 907 17
Nov-05 902 70 706 909 17
Dec-05 903 70 716 910 17
Jan-06 915 70 731 922 17
Feb-06 920 68 753 927 19
Mar-06 933 68 767 940 19
-- Not Applicable
* Do not add up to total because of multiple membership.
Note: Number of SEBI registered members excluding surrendered, dafaulter and expelled members.

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