The Securities Contracts (Regulation) Act, 1956 (SCRA) is a pivotal legislation in India that aims to prevent undesirable transactions in securities by regulating the business of dealing in them. The Act provides a framework for the recognition and regulation of stock exchanges and the listing of securities on these exchanges.
Over the years, the SCRA has undergone several amendments to align with the evolving financial landscape. The most recent significant amendment was introduced by the Finance Act, 2023. This amendment brought changes to Section 18A of the SCRA, which pertains to contracts in derivatives. The specific details of the amendment can be found in Clause 148 of the Finance Bill, 2023.
For a comprehensive understanding of the SCRA, including its latest amendments, you can refer to the official document available on the Securities and Exchange Board of India's (SEBI) website.
Additionally, the Ministry of Finance has issued the Securities Contracts (Regulation) Amendment Rules, 2022, which further amend the Securities Contracts (Regulation) Rules, 1957. These amendments aim to update and refine the regulatory framework governing securities contracts in India.
It's essential to stay updated with these changes, as they have significant implications for market participants, including stock exchanges, brokers, and investors.
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The Securities Contracts (Regulation) Act, 1956 (SCRA), as amended by the Finance Act, 2023, is structured into several sections that outline the regulatory framework for securities contracts in India. The Act has been periodically updated to reflect changes in the financial sector, with the latest amendment introduced by the Finance Act, 2023, which inserted clause (ba) in Section 18A.
Key Sections of the SCRA:
Short Title, Extent, and Commencement: This section provides the official name of the Act, its geographical applicability, and the date it comes into force.
Definitions: Clarifies the meanings of various terms used within the Act, such as "securities," "stock exchange," and other relevant terminology.
Application for Recognition of Stock Exchanges: Outlines the procedure for stock exchanges to apply for official recognition under the Act.
Grant of Recognition to Stock Exchanges: Details the criteria and process through which stock exchanges can be granted recognition by the regulatory authorities.
Withdrawal of Recognition: Specifies the conditions under which the recognition of a stock exchange can be withdrawn.
Power of Recognized Stock Exchanges to Make Bye-laws: Empowers recognized stock exchanges to formulate bye-laws for the regulation and control of contracts.
Power of Securities and Exchange Board of India (SEBI) to Make or Amend Bye-laws of Recognized Stock Exchanges: Grants SEBI the authority to create or modify bye-laws for recognized stock exchanges.
Power of Central Government to Supercede Governing Body of a Recognized Stock Exchange: Allows the Central Government to replace the governing body of a recognized stock exchange under certain circumstances.
Power to Suspend Business of Recognized Stock Exchanges: Provides the authority to temporarily halt the operations of recognized stock exchanges if necessary.
Power to Issue Directions: Enables regulatory bodies to issue directives to stock exchanges and other market participants to ensure compliance with the Act.
Contracts in Notified Areas Illegal in Certain Circumstances: Declares certain contracts in specified areas as illegal under particular conditions.
Additional Trading Floor: Discusses provisions related to the establishment of additional trading floors by recognized stock exchanges.
Contracts in Notified Areas to be Void in Certain Circumstances: Specifies conditions under which contracts in notified areas are considered void.
Exclusion of Spot Delivery Contracts from Provisions of Sections 13, 14, 15, and 17: Exempts spot delivery contracts from specific sections of the Act.
Liability of Directors of Defaulting Companies: Defines the responsibilities and potential liabilities of directors in companies that default under the Act.
Penalty for Failure to Comply with Provisions of the Act: Outlines the penalties imposed for non-compliance with the Act's provisions.
Offences by Companies: Details the offences committed by companies and the corresponding legal consequences.
Cognizance of Offences by Courts: Specifies how courts should take cognizance of offences under the Act.
Appeal to Securities Appellate Tribunal: Provides the mechanism for appealing decisions to the Securities Appellate Tribunal.
Power to Make Rules: Grants the authority to formulate rules for the effective implementation of the Act.
Power to Make Regulations: Empowers the creation of regulations to facilitate the Act's objectives.
Laying of Rules and Regulations Before Parliament: Mandates that all rules and regulations made under the Act be presented before Parliament.
Repeals and Savings: Addresses the repeal of previous enactments and the saving of certain provisions.
| Commercial's The Securities Contract Regulation Act, 1956 along with Rules As amended by the Finance Act, 2023 |
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