Securities Contracts (Regulation) Act, 1956

Last updated: 09 April 2021

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Quick Summary

The Securities Contracts (Regulation) Act, 1956 is a key piece of legislation in India that regulates trading in securities. It defines various terms, establishes provisions for recognised stock exchanges, and outlines penalties for non-compliance. The Act aims to prevent undesirable transactions and ensure orderly conduct in the securities market.

Securities and Exchange Board of India SECURITIES CONTRACTS (REGULATION) ACT, 1956 [42 OF 1956] SECTIONS PRELIMINARY 1.Short title, extent and commencement 2.Definitions RECOGNISED STOCK EXCHANGES 3.Application for recognition of stock exchanges 4.Grant of recognition to s

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FAQ :

The Act's primary purpose is to prevent undesirable transactions in securities by regulating the business of dealing in them and addressing related matters.

Securities include shares, scrips, stocks, bonds, debentures, debenture stock, derivatives, units of collective investment schemes, security receipts, and units issued under mutual fund schemes.

The Act covers preliminary definitions, provisions for recognised stock exchanges, penalties and procedures for violations, and miscellaneous provisions.

SEBI has the power to make or amend bye-laws of recognised stock exchanges and is involved in approving schemes for corporatisation and demutualisation.

No, the Act prohibits stock exchanges other than recognised stock exchanges from operating.

The Act specifies various penalties for contraventions, including failure to furnish information, non-compliance with agreements, and failure to redress investor grievances, among others.