Recognition of Stock Exchanges
Application Process:
Section 3 of the Securities Contracts (Regulation) Act, 1956 outlines the procedure for stock exchanges seeking recognition from the Central Government. Stock exchanges interested in recognition must submit an application in the prescribed manner, accompanied by specified particulars and copies of relevant bye-laws and rules.
Contents of Application:
- The application should include details about the governing body, its constitution, powers, and management procedures.
- It should outline the powers and duties of office bearers, criteria for membership, and procedures for admission, suspension, expulsion, and readmission of members.
- Additionally, the application must cover procedures for partnership registration and appointment of authorized representatives and clerks.
Grant of Recognition:
Section 4 empowers the Central Government, or SEBI, after necessary inquiry and obtaining additional information, to grant recognition to a stock exchange if certain conditions are met. These conditions include conformity with prescribed rules, willingness to comply with imposed conditions, and alignment with trade and public interest.
Publication and Effect:
- Upon meeting the necessary criteria, recognition is granted subject to prescribed conditions.
- The grant of recognition is published in the Gazette of India and the Official Gazette of the State where the stock exchange is located, and it takes effect from the date of publication in the Gazette of India.
Withdrawal of Recognition
Consideration for Withdrawal:
If the Central Government believes that withdrawal of recognition is necessary in the interest of trade or public interest, it may serve a written notice to the governing body of the stock exchange, stating the reasons for considering withdrawal.
Opportunity for Hearing:
- The governing body is given an opportunity to be heard on the matter.
- Following this process, the Central Government may withdraw recognition by notification in the Official Gazette.