In a bid to exercise control on trading by non-resident Indians in the derivatives segment, the National Stock Exchange has directed that NRIs can only trade through trading members (a sub-group of NSE members).

As an additional measure to track their trades, NSE has decided to allot a unique client code to NRIs. This means that an NRI's trades cannot be cleared by a professional clearing member.

NRIs will have to approach a trading member of the exchange, and the NSE will assign a unique client code to each NRI, the exchange advised its member-brokers.

NRIs can change their clearing member if they wish or even have their trades cleared by more than one clearing member. But in this case all such clearing members will have to give separate applications to the exchange for allotment of a unique client code. "Thus each and every clearing member is required to communicate to the exchange the details of their NRI clients," the NSE said.

The measure seems to be a step towards exercising total control over the movement of NRI money in the derivatives markets, after the Reserve Bank of India banned overseas corporate bodies -- owned and controlled predominately by people of Indian origin -- from trading in the Indian markets.

Meanwhile, to ensure that these requirements meet with no resistance, the NSE has told its member-brokers that non-compliance with these requirements would be treated as a violation.

Earlier Sebi had mandated NRIs to make a disclosure that their position -- along with that of others acting in concert -- in index-based contracts does not exceed 15 per cent of the total open interest of all derivative contracts on the particular underlying index.

In the case of stock option and single stock futures contracts, Sebi's guidelines stipulate that the gross open position across all derivative contracts on a particular underlying stock of a NRI should not exceed the higher of 0.1 per cent of the free float market capitalisation (in terms of the number of shares), or 0·5 per cent of the open interest in the derivative contracts on a particular underlying stock (in terms of number of contracts).