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

A recognised stock exchange frames bye-laws on its clearing house. Which matter can its bye-laws under the Securities Contracts (Regulation) Act, 1956 provide for in relation to the clearing house?

Exchange bye-laws may provide for a clearing house handling periodical settlement of contracts and differences, delivery of and payment for securities, and passing on of delivery orders, along with its regulation and maintenance. Tax rates, issuer directors and depository participant registration are not covered.

  1. APeriodical settlement of contracts and differences, delivery of and payment for securities, and passing on of delivery ordersCorrect
  2. BFixing the income-tax rate on settlement profits
  3. CAppointment of the directors of the issuing companies
  4. DGranting registration to depositories participants

Explanation

Section 9(2)(b) lets bye-laws provide for a clearing house for periodical settlement of contracts and differences, delivery and payment for securities, passing on of delivery orders, and its regulation and maintenance. The other options are outside the exchange's bye-law powers.

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