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CS Executive · Capital Market and Securities Laws · Basics of Capital Market

A stock exchange in India proposes to change its rules on trading of securities. Which statement best reflects the regulatory framework for a recognised stock exchange under the Securities Contracts (Regulation) Act, 1956?

Under the Securities Contracts (Regulation) Act, 1956, only recognised stock exchanges can operate, and their recognition and rule changes are subject to SEBI's oversight and approval. Registering as a company or getting RBI recognition does not suffice, and exchanges cannot change rules freely.

  1. AOnly recognised stock exchanges may operate, and recognition and rule changes are subject to SEBI oversight and approvalCorrect
  2. BAny company may run a stock exchange after registering with the Registrar of Companies
  3. CStock exchanges frame rules freely, with no approval needed from any regulator
  4. DRecognition of stock exchanges is granted by the Reserve Bank of India

Explanation

Under the SCRA, stock exchanges must be recognised, and recognition and the making or amendment of rules are subject to SEBI's oversight and approval. Registration with the RoC alone is insufficient, and RBI does not recognise exchanges. Rules are not free of regulatory approval.

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