 The securities contracts(regulation)Act ,1956,is an
Act to present undesirable in securities by
regulating the business of dealing therein by
providing for certain other matters connected
 It was enacted by parliament in the seventh year of
the Republic of India(1956) & extends to the whole
of India .
3. DEFINITIONS OF CERTAIN
In this act,
 Government security
 Recognized stock exchange
 Securities appellate tribunal
 Stock exchange
4. WHAT IT DEALS WITH ?
The [SC(R)A]- Securities contracts (Regulation) Act
deals with :
 Stock exchanges ,through a process of recognition
& continued supervision.
 Contracts in securities
 Listing of securities on stock exchanges.
5. WHY DID IT COME INTO EXISTENCE
 Stock market plays a significant role in
development of the economy.
 Stock market facilitates mobilization of funds
from small savings of investors & channelizes
these resources into various development needs of
various sectors of the economy.
 Stock market also provides mechanism for trading
of securities thus ensuring liquidity to the
investment of investors.
6.  Thus ,stock market facilitates transactions in
 In order to prevent undesirable transactions in
securities ,promote healthy stock market ,the
securities contracts(Regulation )Act 1956 enacted
by parliament vide act no2
 This applying to whole of India
7. WHO IS RESPONSIBLE & THE
HISTORY BEHIND IT ?
 Before 1800 ,Indian securities transactions were
loans from the East Indian company
 1830-Bank securities traded in Bombay
 Companies act of 1850-Limited liability & Joint
 1861 –American civil war –cotton needs , England
 Immense fund flow-share mania of 1860-65
8.  End of civil war ,price of cotton fell , Black Friday
,July 1 ,1865,share mania came to a hall
 But still no of brokers in Bombay increased
 1875-Brokers association
 1877-native stock & share Brokers Association
,precursor to Bombay stock exchange
 Increase in economic activity due to first world war
 1918-19-Several brokers manipulated standard mill
& Madhavji mill ,red to crash ,forward trading
9.  1920’s market slump
 Bombay legislative council-created committee to
look into the Bombay exchange Activities , head-
 Report stated frequent occurrence of self regulated
in the market ,offenses & manipulations
 1925-Another crash -> securities contracts control
act [but no effective implementation]
 1927-1937-5 serious crises on Bombay exchange
10.  W.B.Morrison-enquiry committee was formed
 Even with application of the committee’s
recommendations ,It failed to stop malpractice
 Another committee –headed by A.D.Gorwal(1951)
 Securities contract (Regulation)act of 1956
11. INIDAN REGULATORY FRAMEWORK
SECURITIES ISSUANCE : REGULATORY FRAMSECURITIES ISSUANCE: REGULATORY FRAMEWORK
SCR ACT SEBI ACT
 The scr act was enacted to form a healthy market
 It controls the securities ,geographical areas for
trading ,licensing of stock exchanges ,constitution
& governance of stock exchanges & listing
 It restricts trading of securities that are not
covered under its definition . There were several
amendments to this act ,its introduction to further
include interests of the investor.
15. THE LATEST AMENDMENT
 It was made in the year 2012.securities
contracts(regulation )(stock exchanges & clearing
16. IMPLICATIONS IN THE SOCIETY:
 traditionally ,the stock exchanges in India were
organizations formed generally on not-for profit &
the trading members besides rendering various
services were also owning ,controlling &
managing the stock exchanges.
 They were essentially not corporatized & working
on mutual basis.
 This type of system had its own merits & inherent
17.  however with the passage of time & events occurring at
the various stock exchanges ,a thought was
contemplated as why they should not be allowed to
corporatized & work on demutualization basis.
 The advantage of the new system is that the public
interest of the private interest is regulated to the
 The primary implications is to stop malpractices.
 After this Act ,to a certain extent investors started
trusting the stock exchange.
18.  There was less means of cheating & the
government had control over it .
 It reduced serious crises