Introduction Of  Regulatory Framework Governing Stock Exchanges :

The Securities Contracts (Regulation) Act, 1956 provides for direct and indirect control of all aspects of the securities trading including the running of stock exchanges which aims to prevent undesirable transaction in securities. It gives the Central Government regulatory jurisdiction over (a) Stock exchanges through a process of recognition and continued supervision, (b) contracts in securities, and (c) listing of securities on stock exchanges.

As a condition of recognition, a stock exchange complies with the requirements prescribed by the Central Government. The stock exchange frame their own listing regulations in consonance with the minimum listing criteria set out in Securities contracts (Regulation) Rules, 1957.

The Government promulgated the Securities Contracts (Regulation) Rules, 1957 for carrying into effect the objects of the Securities Contracts ( Regulation) Act. These rules provide among other things, for the procedure to be followed for recognition of Stock Exchanges; Submission of periodical returns and annual reports by recognised stock exchanges; inquiry into the affairs of stock exchanges and their members ; and requirements for listing of securities. The rules are statutory and they constitute a code of standardised regulations uniformly applicable to all the recognised stock exchanges.

SEBI also issued the Securities Contracts (Regulation) (Stock Exchanges and Cleaning Corporations) Regulations, 2012 to regulate the recognition, ownership and governance in stock exchanges and cleaning corporations.