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TWENTY-TWO months after the Securities and Exchange Board of India (SEBI) banned forward trading to curb undesirable speculation, its governing board approved a revised carry forward trading system last week. "The main problem with the ban on badla was reduced liquidity, "says SEBI chief D.R. Mehta. "There was no depth in the market. Any large selling by an institutional investor would immediately hit the sensex adversely."

The timing may have had a lot to do with the fact that a Rs 7,000-crore public sector unit (PSU) disinvestment process by the Government was beginning within a few days. But no one's complaining. "The road shows in Europe and the US to get customers could hardly have been called a big success," says a top Bombay broker who requested anonymity. "The Government realised that if carryforward was not re-introduced to bring in some liquidity into the market, the whole disinvestment programme might be a big flop." This, besides being embarrassing for the Government, would also have kept the deficit at its present dangerous level.

The new carryforward scheme indicates that the Indian stockmarkets have come of age. The system has been worked out rough discussions between SEBI and the Bombay Stock Exchange (BSE). After years of behaving like a market watchdog that snarled constantly at brokers, SEBI has finally taken cognisance of the practical problems they face. It has thus dropped its initial proposal of limiting a member's outstanding position to 25 per cent of the total delivery business, and has changed submission of monthly audit certificates to self-certification by the brokers. And BSE, too, has realised the need for market discipline and accepted several of the original SEBI proposals which it had initially rejected, including the capital adequacy norms that SEBI had been trying to impose since 1993. "This is a big break through," says Mehta.

The effects of the new system should be immediately visible. Trading volumes will improve. The sensex will move up. And disheartened primary issue aspirants will be enthusiastically calling up their merchant bankers again.

But there will be losers too. SPIC Petrochemicals, if it had anticipated the loosening of carryforward regulations, would surely not have priced its Rs 715 crore issue, planned for next month, at par. But then, you can't win 'em all. SPIC can at least now be certain that its issue will be oversubscribed.

The real losers, though, are the stock exchanges who thought they could survive without computerisation. Since carryforward transactions will only be available to com-puterised exchanges (at present the National Stock Exchange and the BSE, with Delhi about to go online), for the other more backward bourses, the new rules are almost a death threat.

But then, the stockmarket has always been a cruel arena.