CONTRACTS IN SECURITIES :

If the Central Government is satisfied, having regard to the nature or the volume of transactions in securities in any State or States or area, that it is necessary so to do, it may, by notification in the Official Gazette, declare that section 13 to apply to such State or States or area, and thereupon every contract in such State or States or area which is entered into after date of the notification otherwise than between members of a recognised stock exchange or recognized stock exchanges in such State or States or area or through or with such member shall be illegal.

However, any contract entered into between members of two or more recognised stock exchanges in such State or States or area, shall –

(i) be subject to such terms and conditions as may be stipulated by the respective stock exchanges with prior approval of SEBI;
(ii) require prior permission from the respective stock exchanges if so stipulated by the stock exchanges with prior approval of SEBI.