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CS Executive · Capital Market and Securities Laws · Securities Contracts (Regulation) Act, 1956

A clearing corporation repeatedly fails to conduct its business with its members in accordance with SEBI's rules, regulations and directions. Which penalty applies under the Securities Contracts (Regulation) Act, 1956?

The penalty is at least five crore rupees and may extend to twenty-five crore rupees or three times the gains made from the failure, whichever is higher. It applies to stock exchanges and clearing corporations that do not follow SEBI's rules, regulations and directions.

  1. ANot less than one crore rupees but up to ten crore rupees
  2. BA fixed penalty of twenty-five crore rupees only
  3. CNot less than five crore rupees, extending to twenty-five crore rupees or three times the gains from the failure, whichever is higherCorrect
  4. DImprisonment up to one year with no monetary penalty

Explanation

Section 23GA applies to a stock exchange or clearing corporation that fails to conduct business per SEBI rules, regulations and directions. The penalty is at least five crore rupees and may extend to twenty-five crore rupees or three times the gains made, whichever is higher. It is a range, not a fixed sum.

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