Section 12 of SCRA : Section 12: Power To Suspend Business Of Recognised Stock Exchanges

Explanation using Example

Imagine a scenario where there is a sudden geopolitical crisis leading to extreme volatility in the stock markets. The government, concerned about the potential impact on the economy and investors, invokes Section 12 of The Securities Contracts (Regulation) Act, 1956. They issue a notification stating that due to the emergency, a particular stock exchange will suspend trading for a period of seven days to prevent market panic and protect the interests of the investors. The notification is published in the Official Gazette with a detailed explanation of the reasons for this decision.

As the initial seven-day suspension comes to an end, the crisis continues, and the government believes it is in the public interest to extend the suspension. Before issuing a notification to extend the suspension period, the government provides an opportunity for the governing body of the stock exchange to be heard on the matter, respecting the provisions of the Act.