2. INTRODUCTION
The securities contracts(regulation)Act ,1956,is an
Act to present undesirable in securities by
regulating the business of dealing therein by
providing for certain other matters connected
therewith.
It was enacted by parliament in the seventh year of
the Republic of India(1956) & extends to the whole
of India .
3. DEFINITIONS OF CERTAIN
IMPORTANT TERMS
In this act,
Contract
Derivative
Government security
Member
Prescribed
Recognized stock exchange
Rules
Securities appellate tribunal
Securities
Stock exchange
4. WHAT IT DEALS WITH ?
The [SC(R)A]- Securities contracts (Regulation) Act
deals with :
Stock exchanges ,through a process of recognition
& continued supervision.
Contracts in securities
Listing of securities on stock exchanges.
5. WHY DID IT COME INTO EXISTENCE
?
Stock market plays a significant role in
development of the economy.
Stock market facilitates mobilization of funds
from small savings of investors & channelizes
these resources into various development needs of
various sectors of the economy.
Stock market also provides mechanism for trading
of securities thus ensuring liquidity to the
investment of investors.
6. Thus ,stock market facilitates transactions in
securities
In order to prevent undesirable transactions in
securities ,promote healthy stock market ,the
securities contracts(Regulation )Act 1956 enacted
by parliament vide act no2
This applying to whole of India
7. WHO IS RESPONSIBLE & THE
HISTORY BEHIND IT ?
Before 1800 ,Indian securities transactions were
loans from the East Indian company
1830-Bank securities traded in Bombay
Companies act of 1850-Limited liability & Joint
stock company
1861 –American civil war –cotton needs , England
approached India
Immense fund flow-share mania of 1860-65
8. End of civil war ,price of cotton fell , Black Friday
,July 1 ,1865,share mania came to a hall
But still no of brokers in Bombay increased
1875-Brokers association
1877-native stock & share Brokers Association
,precursor to Bombay stock exchange
Increase in economic activity due to first world war
1918-19-Several brokers manipulated standard mill
& Madhavji mill ,red to crash ,forward trading
halted .
9. 1920’s market slump
Bombay legislative council-created committee to
look into the Bombay exchange Activities , head-
Sir Wilfred
Report stated frequent occurrence of self regulated
in the market ,offenses & manipulations
1925-Another crash -> securities contracts control
act [but no effective implementation]
1927-1937-5 serious crises on Bombay exchange
10. W.B.Morrison-enquiry committee was formed
Even with application of the committee’s
recommendations ,It failed to stop malpractice
Another committee –headed by A.D.Gorwal(1951)
Securities contract (Regulation)act of 1956
11. INIDAN REGULATORY FRAMEWORK
SECURITIES ISSUANCE : REGULATORY FRAMSECURITIES ISSUANCE: REGULATORY FRAMEWORK
DEPOSITORI
ES ACT
SCR ACT SEBI ACT
COMPANIES
ACT
SEBI Rules,
guidelines
Stock
exchanges
Intermediarie
s
ISSUER
12. AMENDMENTS
The scr act was enacted to form a healthy market
in India.
It controls the securities ,geographical areas for
trading ,licensing of stock exchanges ,constitution
& governance of stock exchanges & listing
agreements.
It restricts trading of securities that are not
covered under its definition . There were several
amendments to this act ,its introduction to further
include interests of the investor.
15. THE LATEST AMENDMENT
It was made in the year 2012.securities
contracts(regulation )(stock exchanges & clearing
corporation)Regulations,2012[Mumbai,20thJune 2012]
16. IMPLICATIONS IN THE SOCIETY:
traditionally ,the stock exchanges in India were
organizations formed generally on not-for profit &
the trading members besides rendering various
services were also owning ,controlling &
managing the stock exchanges.
They were essentially not corporatized & working
on mutual basis.
This type of system had its own merits & inherent
limitations
17. however with the passage of time & events occurring at
the various stock exchanges ,a thought was
contemplated as why they should not be allowed to
corporatized & work on demutualization basis.
The advantage of the new system is that the public
interest of the private interest is regulated to the
background
The primary implications is to stop malpractices.
After this Act ,to a certain extent investors started
trusting the stock exchange.
18. There was less means of cheating & the
government had control over it .
It reduced serious crises
