NISM Certifications · NISM-Series-VIII: Equity Derivatives · Legal and Regulatory Environment
Which statute primarily provides the legal basis for regulating the trading of derivative contracts in India by declaring them to be 'securities'?
The Securities Contracts (Regulation) Act, 1956 is the statute that includes derivatives within the definition of securities, which brings their trading on recognised stock exchanges under regulatory control. The Companies Act, Contract Act and Banking Regulation Act do not serve this purpose.
- ASecurities Contracts (Regulation) Act, 1956Correct
- BIndian Contract Act, 1872
- CCompanies Act, 2013
- DBanking Regulation Act, 1949
Explanation
The Securities Contracts (Regulation) Act, 1956 was amended to include derivatives within the definition of 'securities', so they are regulated under it. The other Acts do not provide this basis for derivatives trading on exchanges.
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