Section 10 of SCRA : Section 10: Power Of Securities And Exchange Board Of India To Make Or Amend Bye-Laws Of Recognised Stock Exchanges

Explanation using Example

Example of Section 10 of The Securities Contracts (Regulation) Act, 1956 in Everyday Context:

Suppose the Securities and Exchange Board of India (SEBI) notices that there is an increase in market manipulation due to certain trading practices on a recognized stock exchange. To curb this, SEBI decides that it's necessary to impose stricter regulations on the types of trades that can be executed and the information that must be disclosed by the traders.

SEBI consults with the governing body of the stock exchange and records its reasons why these changes are expedient for maintaining the integrity of the markets. After this consultation, SEBI drafts new byelaws that detail these additional requirements and restrictions.

Once the byelaws are finalized, they are published in the Gazette of India and in the state's Official Gazette where the stock exchange is located. From the date of publication in the Gazette of India, these new byelaws are as effective as if the stock exchange itself had made them.

If the governing body of the stock exchange disagrees with any of the new byelaws, they have two months to request a revision from SEBI. SEBI will then review the byelaws, considering the stock exchange's concerns, and may revise them accordingly. Any revisions will also be published and take effect as per the procedure outlined.

In an urgent situation, if SEBI believes that immediate action is required to protect the interests of investors or the public, it can issue new or revised byelaws without prior publication, provided it documents the reasons for such a decision.