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

Anil asks whether the old SCRA prohibition on options in securities, formerly in Section 20, still applies. What is the correct position based on the Act's text?

The prohibition no longer exists. Section 20, which dealt with prohibition of options in securities, was omitted by the Securities Laws (Amendment) Act, 1995, effective 25 January 1995. It was not replaced by a permission rule or limited to particular securities.

  1. AIt applies only to options on individual shares
  2. BIt was omitted by the Securities Laws (Amendment) Act, 1995, with effect from 25 January 1995Correct
  3. CIt was converted into a requirement of Central Government permission
  4. DIt continues but only for unlisted securities

Explanation

The text shows Section 20, headed prohibition of options in securities, as omitted by the Securities Laws (Amendment) Act, 1995 w.e.f. 25-1-1995. It therefore no longer prohibits options, and no replacement permission condition or share-type limitation appears there.

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