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SECURITIES CONTRACTS (REGULATION) ACT, 1956
1. Short title, extent and commencement 1
2. Definitions 1
2A. Interpretation of certain words and expressions 6 RECOGNISED STOCK EXCHANGES
3. Application for recognition of stock exchanges 6
4. Grant of recognition to stock exchanges 7
4A.
4B. Procedure for corporatisation and demutualisation
5. Withdrawal of recognition
6. Power of Central Government to call for periodical returns or direct inquiries to be made 10
7. Annual reports to be furnished to Central Government by stock exchanges 11
7A. Power of recognised stock exchange to make rules restricting voting rights, etc. 11
8. Power of Central Government to direct rules to be made or to make rules 12
8A. Clearing corporation 12
9. Power of recognised stock exchanges to make bye-laws 13
10. Power of Securities and Exchange Board of India to make or amend bye-laws of recognised stock exchanges
11. Power of Central Government to supersede governing body of a recognised stock exchange
12. Power to suspend business of recognised stock exchanges
CONTRACTS AND OPTIONS IN SECURITIES
13. Contracts in notified areas illegal in certain circumstances
14. Contracts in notified areas to be void in certain circumstances
15. Members may not act as principals in certain circumstances
16.
17.
17A. Public issue and listing of securities referred to in sub-clause (ie) of clause (h) of section 2
18. Exclusion of spot delivery contracts from sections 13, 14, 15 and 17 21
19. Stock exchanges other than recognised stock exchanges prohibited
20. [Omitted by the Securities Laws (Amendment) Act, 1995, w.e.f. 25-1-1995]
LISTING OF SECURITIES
23B.
23E.
23F.
23G.
SECURITIES CONTRACTS (REGULATION) (APPEAL TO SECURITIES APPELLATE TRIBUNAL) RULES, 2000
22. Fee for inspection of records and obtaining copies thereof
23. Working hours of the Appellate Tribunal
24. Holiday
25. Functions of the Registrar
26. Additional functions and duties of Registrar
SECURITIES CONTRACTS (REGULATION) (PROCEDURE FOR HOLDING INQUIRY AND IMPOSING PENALTIES) RULES, 2005
1.
2.
3.
4. Holding of
5. Order of the Board or the adjudicating of
6. Copy of the order
7. Service of notices and orders
Securities Contracts (Regulation) Act, 1956
[42 OF 1956]
An Act to prevent undesirable transactions in securities by regulating the business of dealing therein, 1[***] by providing for certain other matters connected therewith. BE it enacted by Parliament in the Seventh Year of the Republic of India as follows :
PRELIMINARY
Short title, extent and commencement.
1. (1) This Act may be called the Securities Contracts (Regulation) Act, 1956.
(2) It extends to the whole of India.
(3) It shall come into force on such date2 as the Central Government may, by notification in the Official Gazette, appoint. Definitions.
2. In this Act, unless the context otherwise requires,—
(a) “contract” means a contract for or relating to the purchase or sale of securities;
3[(aa) “corporatisation” means the succession of a recognised stock exchange, being a body of individuals or a society registered under the Societies Registration Act, 1860 (21 of 1860), by another stock exchange, being a company incorporated for the purpose of assisting, regulating or controlling the business of buying, selling or dealing in securities carried on by such individuals or society;
(ab) “demutualisation” means the segregation of ownership and management from the trading rights of the members of a recognised stock exchange in accordance with a scheme approved by the Securities and Exchange Board of India;]
1. Words “by prohibiting options and” omitted by the Securities Laws (Amendment) Act, 1995, w.e.f. 25-1-1995.
2. 20-2-1957 vide SRO 528, dated 16-2-1957.
3. Inserted by the Securities Laws (Amendment) Act, 2004, w.e.f. 12-10-2004.
S. 2 SECURITIES CONTRACTS (REGULATION) ACT, 1956 2
4[5[(ac)] “derivative” includes—
(A) a security derived from a debt instrument, share, loan, whether secured or unsecured, risk instrument or contract for differences or any other form of security;
(B) a contract which derives its value from the prices, or index of prices, of underlying securities;]
6[(C) commodity derivatives; and
(D) such other instruments as may be declared by the Central Government to be derivatives;]
(b) “Government security” means a security created and issued, whether before or after the commencement of this Act, by the Central Government or a State Government for the purpose of raising a public loan and having one of the forms specified in clause (2) of section 2 of the Public Debt Act, 1944 (18 of 1944);
6[(bb) “goods” mean every kind of movable property other than actionable claims, money and securities;
(bc) “commodity derivative” means a contract —
(i) for the delivery of such goods, as may be notified by the Central Government in the Official Gazette6a, and which is not a ready delivery contract; or
(ii) for differences, which derives its value from prices or indices of prices of such underlying goods or activities, services, rights, interests and events, as may be notified by the Central Government, in consultation with the Board, but does not include securities as referred to in sub-clauses (A) and (B) of clause (ac);]
(c) “member” means a member of a recognised stock exchange;
6[(ca) “non-transferable specific delivery contract” means a specific delivery contract, the rights or liabilities under which or under any delivery order, railway receipt, bill of lading, warehouse receipt or any other documents of title relating thereto are not transferable;]
(d) “option in securities” means a contract for the purchase or sale of a right to buy or sell, or a right to buy and sell, securities in future, and includes a teji, a mandi, a teji mandi, a galli, a put, a call or a put and call in securities;
6b[(da) “pooled investment vehicle” means a fund established in India in the form of a trust or otherwise, such as mutual fund, alternative investment
4. Inserted by the Securities Laws (Amendment) Act, 1999, w.e.f. 22-2-2000.
5. Clause (aa) renumbered by the Securities Laws (Amendment) Act, 2004, w.e.f. 12-10-2004.
6. Inserted by the Finance Act, 2015, w.e.f. 28-9-2015.
6a. See Notification issued under section 2(bc).
6b. Inserted by the Finance Act, 2021, w.e.f. 1-4-2021.
CONTRACTS (REGULATION) ACT, 1956 S. 2
fund, collective investment scheme or a business trust as defined in *sub-section (13A) of section 2 of the Income-tax Act, 1961 (43 of 1961) and registered with the Securities and Exchange Board of India, or such other fund, which raises or collects monies from investors and invests such funds in accordance with such regulations as may be made by the Securities and Exchange Board of India in this behalf;]
(e) “prescribed” means prescribed by rules made under this Act;
6c[(ea) “ready delivery contract” means a contract which provides for the delivery of goods and the payment of a price therefor, either immediately, or within such period not exceeding eleven days after the date of the contract and subject to such conditions as the Central Government may, by notification in the Official Gazette, specify in respect of any goods, the period under such contract not being capable of extension by the mutual consent of the parties thereto or otherwise:
Provided that where any such contract is performed either wholly or in part :
(
I) by realisation of any sum of money being the difference between the contract rate and the settlement rate or clearing rate or the rate of any offsetting contract; or
(II) by any other means whatsoever, and as a result of which the actual tendering of the goods covered by the contract or payment of the full price therefor is dispensed with, then such contract shall not be deemed to be a ready delivery contract;]
(f) “recognised stock exchange” means a stock exchange which is for the time being recognised by the Central Government under section 4;
(g) “rules”, with reference to the rules relating in general to the constitution and management of a stock exchange, includes, in the case of a stock exchange which is an incorporated association, its memorandum and articles of association;
7[(ga) “scheme” means a scheme for corporatisation or demutualisation of a recognised stock exchange which may provide for—
(i) the issue of shares for a lawful consideration and provision of trading rights in lieu of membership cards of members of a recognised stock exchange;
(ii) the restrictions on voting rights;
(iii) the transfer of property, business, assets, rights, liabilities, recognitions, contracts of the recognised stock exchange, legal proceedings by, or against, the recognised stock exchange, whether in the name of the recognised stock exchange or any trustee or otherwise and any permission given to, or by, the recognised stock exchange;
* Read as ‘clause’
6c. Inserted by the Finance Act, 2015, w.e.f. 28-9-2015.
7. Inserted by the Securities Laws (Amendment) Act, 2004, w.e.f. 12-10-2004.
S. 2
SECURITIES CONTRACTS (REGULATION) ACT, 1956 4
(iv) the transfer of employees of a recognised stock exchange to another recognised stock exchange;
(v) any other matter required for the purpose of, or in connection with, the corporatisation or demutualisation, as the case may be, of the recognised stock exchange;]
8[9[(gb)] “Securities Appellate Tribunal” means a Securities Appellate Tribunal established under sub-section (1) of section 15K of the Securities and Exchange Board of India Act, 1992 (15 of 1992);]
(h) “securities” include—
(i) shares, scrips, stocks, bonds, debentures, debenture stock or other marketable securities of a like nature in or of any incorporated company 9a[or a pooled investment vehicle or other body corporate];
10[(ia) derivative;
(ib) units or any other instrument issued by any collective investment scheme to the investors in such schemes;]
11[(ic) security receipt as defined in clause (zg) of section 2 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002;]
12[(id) units or any other such instrument issued to the investors under any mutual fund scheme.]
13[Explanation.—For the removal of doubts, it is hereby declared that “securities” shall not include any unit linked insurance policy or scrips or any such instrument or unit, by whatever name called, which provides a combined benefit risk on the life of the persons and investment by such persons and issued by an insurer referred to in clause (9) of section 2 of the Insurance Act, 1938 (4 of 1938);]
8. Inserted by the Securities Laws (Second Amendment) Act, 1999.
9. Clause (ga) renumbered by the Securities Laws (Amendment) Act, 2004, w.e.f. 12-10-2004.
9a. Substituted for “or other body corporate” by the Finance Act, 2021, w.e.f. 1-4-2021.
10. Inserted by the Securities Laws (Amendment) Act, 1999, w.e.f. 22-2-2000.
11. Inserted by the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, w.r.e.f. 21-6-2002.
12. Inserted by the Securities Laws (Amendment) Act, 2004, w.e.f. 12-10-2004.
13. Inserted by the Securities and Insurance Laws (Amendment and Validation) Act, 2010, w.r.e.f. 9-4-2010. Chapter VI of the Securities and Insurance Laws (Amendment and Validation) Act, 2010, read as under :
“CHAPTER VI
Miscellaneous
6. Validation.—Notwithstanding anything contained in any judgment, decree or order of any Court, Tribunal or other authority, the provisions of section 2 of the Insurance Act, 1938 (4 of 1938) or section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956) or section 12 of the Securities and Exchange Board of India Act, 1992 (15 of 1992), as amended by this Act, shall have and shall be deemed to always
(Contd. on page 5)
SECURITIES CONTRACTS (REGULATION)
ACT 1956 WITH RULES – BARE ACT WITH SECTION NOTES
AUTHOR : Taxmann's Editorial Board
PUBLISHER : Taxmann
DATE OF PUBLICATION : December 2025
EDITION : 2026 Edition
ISBN NO : 9789375619529
PAGE NO : 80
BINDING TYPE : Paperback
DESCRIPTION
Securities Contracts (Regulation) Act 1956 with Rules [Bare Act with Section Notes] by Taxmann is an updated Bare Act on India's statutory framework for regulating securities markets, stock exchanges, and securities contracts. It compiles the principal Act with amendments, allied rules, and statutory notifications covering trading, listing, derivatives, penalties, and enforcement. The book reproduces the complete, amended text of the Act, supported by crisp section-wise notes that explain the intent and application of each provision. It serves as a reliable single-point reference for core aspects such as recognised stock exchanges, corporatisation and demutualisation, listing/delisting, SEBI's powers, adjudication, and appellate remedies. This book is intended for the following audience:
• Legal Professionals & Advocates
• Chartered Accountants, Company Secretaries & Compliance Professionals
• Stock Market Intermediaries & Market Participants
• Judicial Officers & Regulatory Authorities
• Academicians & Students
• Law Libraries & Institutions
The Present Publication is the 2026 Edition, covering the amended and updated text of the Securities Contracts (Regulation) Act [Act No. 42 of 1956] and Rules, with the following noteworthy features:
• [Complete Bare Act Text] Full, verbatim text of the Act as amended up to date
• [Section Notes & Explanatory Guidance] Brief section notes to highlight intent, scope, and practical implications
• [Updated Amendments] Incorporates up-to-date changes, including provisions on derivatives, commodity derivatives, pooled investment vehicles, IFSCs, penalties, and SEBI's enforcement powers
• [Pre-amendment Provisions] Earlier versions of amended provisions included through foot notes for historical context and applicability
• [Incorporation of Allied Rules]
o Securities Contracts (Regulation) (Appeal to Securities Appellate Tribunal) Rules 2000
o Securities Contracts (Regulation) (Procedure for Holding Inquiry and Imposing Penalties) Rules 2005
• [Coverage of Penalties & Adjudication Framework] Provisions on civil penalties, offences, settlement, recovery, immunity, and Special Courts
• [Appellate & Judicial Remedies] Statutory framework for appeals before SAT and the Supreme Court
• [User-friendly Bare Act Format] Clear layout and logical arrangement for quick navigation and reference
