In a paper on stock markets, Assocham has said Indian bourses should learn from the Australian system where all the exchanges were merged before it went on-line. ``Two or three small stock exchanges in Australia have come up with product specialisation. One should see how the merger took place,'' the Assocham paper said.

It suggested re-examination of the structures of various exchanges, the product line, number of members, volumes and the quantity of listed stocks. If trading sentiment is to be revived, exchanges must go fully on paperless trading system (dematerialised trading) and introduce rolling settlement along with stock lending and futures and options.

All this will require high capitalisation and capital investment by brokers for stock lending facility and for margin financing,Assocham president L Lakshman has said. The paper has also suggested that Securities and Exchange Board of India (SEBI) should let stock exchanges find their own niche and not come in their way.

If an exchange wants to exclusively trade in derivatives, SEBI should assist it, Assocham said. Assocham has said futures and options trading should begin immediately and its scope should extend to a wide range of products to make it a viable segment.

The chamber paper points that the insurance scheme and settlement guarantee fund for stock brokers need to be reviewed along with segregation of cash and forward markets. As for reviving the primary market, the Assocham paper points out that the size of the issue of new capital should not be more than 25 per cent of the cost of the project. Another 25 per cent should come from internal accruals and the balance 50 per cent through debt.

Issue of capital by way of public issue or rights issue for small investors should be simple equity with no strings in the form ofwarrants and other instruments attached. The paper suggests that concept of third party responsibility should be made applicable on merchant bankers similar to chartered accountants in case of audit assignments.

Assocham has also said that entry norms need to be very restrictive and there should not be any preference allotment either to foreign institutional investors (FIIS), mutual funds or other investors.