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CS Executive · Capital Market and Securities Laws · Secondary Market in India

SEBI inquires into the affairs of a recognised stock exchange and is satisfied that its affairs are being conducted in a manner detrimental to the interests of investors or the securities market. Under Section 12A of the Securities Contracts (Regulation) Act, 1956, which statement is correct?

SEBI may issue directions to stock exchanges, clearing corporations, agencies and any persons associated with the securities market, and also to companies listed or proposed to be listed, as appropriate in investors' interests. The power is not limited to exchanges and needs no Central Government approval.

  1. ASEBI may issue directions only to the stock exchange and not to any other person
  2. BSEBI can act only after the Central Government gives written approval
  3. CSEBI may issue directions to the exchange, clearing corporation or other persons associated with the securities market, and to listed companies, as appropriate in investors' interestsCorrect
  4. DSEBI may issue directions only to companies proposing to list their securities

Explanation

Section 12A allows SEBI, after an inquiry and on being satisfied of the need, to direct stock exchanges, clearing corporations, agencies or persons providing trading, clearing or settlement facilities, any person or class of persons associated with the securities market, and companies whose securities are listed or proposed to be listed. No Central Government approval is stated. Limiting directions to exchanges alone is wrong.

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