1. Short title, extent and commencement.—(1) This Act may be called the Securities Contracts
(Regulation) Act, 1956.
(2) It extents 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.
2. Definitions.—In this Act, unless the context otherwise requires,—
(a)“Contract”means a contract for or relating to the purchase or sale of securities;
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[(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;]
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[(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 contact which derives its value from the prices, or index of prices, of underlying
securities;]
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[(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 (13 of 1944);
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[(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 Gazette, and which is not a ready delivery contract; or
1. The words “by prohibiting options” omitted by Act 9 of 1995, s. 18 (w.e.f 25-1-1995).
2. 20th February, 1957, vide notification No. S.R.O. 528, dated 16th February, 1957, see Gazette of India, Extraordinary, Part II,
sec. 3 this Act has been extended in its application to the Union territory Goa, Daman and Diu by the Act 11 of 1963, s. 3 and
the Schedule (w.e.f 1-2-1965).
3. Ins. by Act 1 of 2005, s. 2 (w.e.f. 12-10-2004).
4. Ins. by Act 31 of 1999, s. 2 (w.e.f. 22-2-2000).
5. Clause (aa) re-lettered as clause (ac) thereof by Act 1 of 2005, s. 2 (w.e.f. 12-10-2004).
6. Ins. by Act 20 of 2015, s. 133 (w.e.f. 14-5-2015).
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(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;
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[(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 tejimandi, a galli, a put, a call or a put and call in
securities;
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[(da) “pooled investment vehicle” means a fund established in India in the form of a trust or otherwise,
such as mutual fund, alternative investment 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;
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[(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;
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[(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;
(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
demutulisation, as the case may be, of the recognised stock exchange;]
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[(gb)] “Securities Appellate Tribunal” means a Securities Appellate Tribunal established under subsection (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 or 6
[or a pooled investment vehicle or other body corporate];
1. Ins. by Act 20 of 2015, s. 133 (w.e.f. 14-5-2015).
2. Ins. by Act 13 of 2021, s. 148 (w.e.f. 1-4-2021).
3. Ins. by Act 1 of 2005, s. 2 (w.e.f. 12-10-2004).
4. Ins. by Act 32 of 1999, s. 2 (w.e.f. 16-12-1999).
5. Clause (ga) re-lettered as clause (gb) thereof by s. 2, ibid. (w.e.f.12-10-2004).
6. Subs. by Act 13 of 2021, s. 148, for “other body corporate” (w.e.f. 1-4-2021).
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[(ia) derivative;
(ib) units or any other instrument issued by any collective investment scheme to the investors
in such schemes;]
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[(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 (54 of 2002);]
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[(id) units or any other such instrument issued to the investors under any mutual fund
scheme;]
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[(ida) units or any other instrument issued by any pooled investment vehicle;]
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[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).]
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[(ie) any certificate or instrument (by whatever name called), issued to an investor by any
issuer being a special purpose distinct entity which possesses any debt or receivable, including
mortgage debt, assigned to such entity, and acknowledging beneficial interest of such investor in
such debt or receiveable including mortgage debt, as the case may be;]
(ii) Government securities; and
(iii) rights or interests in securities;
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[(ha) “specific delivery contract” means a commodity derivative which provides for the
actual delivery of specific qualities or types of goods during a specified future period at a
price fixed thereby or to be fixed in the manner thereby agreed and in which the names of
both the buyer and the seller are mentioned;]
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[(i) “spot delivery contract” means a contract which provides for,—
(a) actual delivery of securities and the payment of a price therefor either on the same day as
the date of the contract or on the next day, the actual period taken for the dispatch of the securities
or the remittance of money therefor through the post being excluded from the computation of the
period aforesaid if the parties to the contract do not reside in the same town or locality;
(b) transfer of the securities by the depository from the account of a beneficial owner to the
account of another beneficial owner when such securities are dealt with by a depository;]
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[(j) “stock exchange” means—
(a) any body of individuals, whether incorporated or not, constituted before corporatisation
and demutualisation under sections 4A and 4B, or
(b) a body corporate incorporated under the Companies Act, 1956 whether under a scheme of
corporatisation and demutualisation or otherwise,
for the purpose of assisting, regulating or controlling the business of buying, selling or dealing in
securities;]
1. Ins. by Act 31 of 1999, s. 2 (w.e.f. 22-2-2000).
2. Ins. by Act 54 of 2002, s. 41 and the Schedule (w.e.f. 21-6-2002).
3. Ins. by Act 1 of 2005, s. 2 (w.e.f. 12-10-2005).
4. Ins by Act 13 of 2021, s. 148 (w.e.f.1-4-2021).
5. The Explanation ins. by Act 26 of 2010, s. 4 (w.e.f. 9-4-2010).
6. Ins. by Act 27 of 2007, s. 2 (w.e.f. 28-5-2007).
7. Ins. by Act 20 of 2015, s. 133 (w.e.f. 14-5-2015).
8. Subs. by Act 22 of 1996, s. 30 and the Schedule, for clause (i) (w.e.f. 20-9-1995).
9. Subs. by Act 1 of 2005, s. 2, for clause (j) (w.e.f. 12-10-2005).
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[(k) “transferable specific delivery contract” means a specific delivery contract which is not a
non-transferable specific delivery contract and which is subject to such conditions relating to its
transferability as the Central Government may by notification in the Official Gazette, specify in this
behalf.]
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[2A. Interpretation of certain words and expressions.—Words and expressions used herein and
not defined in this Act but defined in the Companies Act, 1956 (1 of 1956) or the Securities and Exchange
Board of India Act, 1992 (15 of 1992) or the Depositories Act, 1996 (22 of 1996) shall have the same
meanings respectively assigned to them in those Acts.]