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

The Bombay-based recognised stock exchange 'Western Bourse' wishes to frame bye-laws regulating contracts, including margin requirements. Under the Securities Contracts (Regulation) Act, 1956, what is required before such bye-laws are made?

The exchange needs the previous approval of the Securities and Exchange Board of India. Bye-laws for regulating and controlling contracts, including margin requirements, can be made only subject to that approval, after which they are published in the Gazette.

  1. APrevious approval of the Securities and Exchange Board of IndiaCorrect
  2. BPrevious approval of the Reserve Bank of India
  3. CConsent of all listed companies on the exchange
  4. DApproval of the State Government where its office is situated

Explanation

A recognised stock exchange may make bye-laws for regulation and control of contracts only subject to the previous approval of SEBI. The State Government is involved only in that the bye-laws are later published in its Official Gazette, not in approving them.

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