The Securities Contracts (Regulation) Act, 1956

Securities Contracts (Regulation) Act, 1956

The Securities Contracts (Regulation) Act, 1956 is an Indian law that regulates contracts and options in securities. The Act aims to prevent undesirable transactions in securities by regulating the business of dealing in them.

Key Features:

• Regulates contracts for purchase or sale of securities


• Covers derivatives, including commodity derivatives


• Includes provisions related to stock exchanges, their recognition, and governance


• Provides for penalties for non-compliance with regulations

Objectives:

1. To prevent undesirable transactions in securities


2. To regulate the business of dealing in securities


3. To provide a framework for stock exchanges and their governance


4. To protect investors and ensure fair dealing

Key Provisions:

• Recognition of stock exchanges


• Grant of recognition to stock exchanges


• Corporatisation and demutualisation of stock exchanges


• Withdrawal of recognition from stock exchanges


• Penalties for non-compliance with regulations

Overall, the Securities Contracts (Regulation) Act, 1956 plays a crucial role in regulating the securities market in India, ensuring fair dealing, and protecting investors.