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

A newly formed clearing corporation takes over settlement functions from an exchange. It prepares its bye-laws for this transfer. What must it do with them under the Securities Contracts (Regulation) Act, 1956?

The clearing corporation must submit its bye-laws to SEBI for approval. SEBI may grant approval, and approve the transfer, when satisfied that it is in the interest of trade and also in the public interest. Neither the exchange nor the Central Government approves them.

  1. AFile them with the stock exchange, which approves them on its own authority
  2. BSubmit them to SEBI for approval, which may be granted if the transfer is in the interest of trade and the public interestCorrect
  3. CPublish them directly in the Gazette without any approval
  4. DSubmit them to the Central Government for approval within one year

Explanation

Section 8A(2) requires every clearing corporation to make bye-laws for the transfer and submit them to SEBI for approval. Under 8A(3), SEBI may approve if satisfied that the transfer is in the interest of trade and also in the public interest. The exchange or Central Government is not the approving authority.

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