party, between ordinary corporate members and RSE members wishing to obtain membership of the opposite party stock exchange. In particular the differences in the risk posed by each of them to the financial system. Securities and Exchange Board of India (SEBI) itself recognized this difference and has provided for a stricter regulatory regime for RSE members. Further, SEBI’s and opposite party’s decision to permit RSEs to obtain their membership was aimed at the revival of regional stock exchanges. Membership at the opposite party stock exchange was open to different categories of persons who fulfilled the eligibility criterion laid down by SEBI and opposite party. For purposes of risk assessment, opposite party treated individuals and partnership firms as one class of members, ordinary corporate members as another class of members, and RSEs as a third class of members. Market integrity was the essence of any financial market and therefore, to pre-empt market failures and protect investors, SEBI and the stock exchanges developed a comprehensive risk management system, which was constantly monitored and upgraded. It encompassed capital adequacy of members, deposit and adequate margin requirements, limits on exposure and turnover, indemnity insurance, on-line position monitoring and automatic disablement, etc. The RSE members and other corporate members differed from each other in terms of composition and business.
