The Securities Contracts (Regulation) Act of 1956 was enacted by the Indian Parliament to prevent undesirable transactions in securities markets and promote orderly development. It defines key terms, deals with the recognition and supervision of stock exchanges, and regulates contracts in listed securities. The act was introduced due to a history of stock market crashes and manipulations in India dating back to the 1860s that highlighted the need for regulation to protect investors and support market stability. It has since been amended several times, including in 2012, to further strengthen regulation and incorporate changes.

1. Pavithra
Sachin
Maria
Vidhayaarshini
Philip

2. INTRODUCTION
 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
therewith.
 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
IMPORTANT TERMS
In this act,
 Contract
 Derivative
 Government security
 Member
 Prescribed
 Recognized stock exchange
 Rules
 Securities appellate tribunal
 Securities
 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
securities
 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
stock company
 1861 –American civil war –cotton needs , England
approached India
 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
halted .

9.  1920’s market slump
 Bombay legislative council-created committee to
look into the Bombay exchange Activities , head-
Sir Wilfred
 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
DEPOSITORI
ES ACT
SCR ACT SEBI ACT
COMPANIES
ACT
SEBI Rules,
guidelines
Stock
exchanges
Intermediarie
s
ISSUER

12. AMENDMENTS
 The scr act was enacted to form a healthy market
in India.
 It controls the securities ,geographical areas for
trading ,licensing of stock exchanges ,constitution
& governance of stock exchanges & listing
agreements.
 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.

13.  Securities contracts (Regulation )Rules,1957
 Securities contracts (Regulation)amendments
rules,1996
 Securities contracts (Regulation)(Appeal to
securities appellate tribunal)Rules,2000
 Securities contracts(regulation)amendments
rules,2001
 Securities contracts(regulation)amendments
rules,2003

14.  Securities law (amendment)act,2005
 Securities contracts (regulation)amendments,2007
 Securities
contracts(regulation)(amendment)rules,2010
 Securities contracts(regulation)(second
amendment)rules,2010
 Securities contracts(Regulation)(stock exchange &
clearing corporations)regulations,2012.

15. THE LATEST AMENDMENT
 It was made in the year 2012.securities
contracts(regulation )(stock exchanges & clearing
corporation)Regulations,2012[Mumbai,20thJune 2012]

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
limitations

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
background
 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

19. THANK YOU