prpri History of Indian Securities Market over the last century History of Indian Securities Market over the last century

SEBI which has done great services to our nation through regulating the business in stock exchanges, securities markets, and various other functions contains in its web site the history of the Indian securities market over the last century. This article intends to introduce you to various historical narratives that led our nation through a century or more of trying times in the securities market and other interesting events like inquiry report as early as 1926 and other anecdotes which will enthrall any investor in questing mind. The details of the web site are as under:

My whole discussions are based on the above link and I, therefore, quote all my information from there. It is purely for academic purposes and intellectual delight.


1. The Indian Companies (Memorandum of Association) Act, 1895.

2. The Indians Companies Act, 1913

3. An act to amend the Indian Companies Act, 1913

4. Bombay Securities Contracts Control Act, 1925

5. The Capital Issues (Control) Act, 1947

6.Gazette notification of SEBI Act 1992

7. Gazette notification of constitution of SEBI

  C. Reports and Notification

Abstract of the Proceedings of the Council of the Governor-General of India for the purpose of making Laws and Regulations

Indian Securities Market

Committee Reports 

1. Report on Bombay Stock Exchange Enquiry Committee – 1924 (Sir Wilfrid Atlay)

2. Report of the Stock Exchange Enquiry Committee – 1937 (Walter B Morison)

3. Report on the Regulation of the Stock Exchanges in India – 1948 (P J Thomas)

Board Minutes of Stock Exchanges

1. Calcutta Stock Exchange (1910 to 1923)

2. Bombay Stock Exchange (1973 to 1980)

3. Madras Stock Exchange (1936 – 1956)

The following Securities Contracts(regulation) Bills were downloaded with the permission of the honorable Lok Sabha speaker.

1. December 24,1954 – Securities Contracts (Regulation) Bill

2. November 28, 1955 – Securities Contracts (Regulation) Bill,1954

3. August 2, 1956 – Securities Contracts (Regulation) Bill, 1956

Let us analyze the details of some of the oldest acts.

The Indian Companies (Memorandum of Association) Act, 1895

It had 4 pages and 11 sections. Under section High court is authorized to allow change of registered office, allow other businesses to be merged, change the area of operation, etc., indicating the business-like attitude of the bill. Quite an amazing experience.

The Indians Companies Act, 1913 

It consisted of 290 sections, 11 parts, Append ice 1 &2, and 4 schedules.

It looks today as the soothsayer of today’s Company law with meticulous care, vivid descriptions, copies of the proforma balance sheet, and whatever one can imagine running the business has been incorporated. It is a thrilling experience to know of India run by the British with extra care in the compilation of business law.

Let us narrate part- wise details:

1. Preliminary

2. Constitution and incorporation

3. Share capital, Registration of an unlimited company as limited and unlimited liabilities of directors

4. Management and administration

5. Winding-up

6. Registration office and fees

7. Application of act for companies registered under former companies act

8. Companies authorized to register under this act

9. Winding up of unregistered companies

10. Companies established outside British India

11. Supplemental legal proceedings.

Section 277 under part 10 contains the following interesting instructions:

  • Within 6 months of coming into operation of the act, a company registered outside British India must file with the registrar the copies of statutes or memorandum and articles of association, or details containing the constitution of the company, details of a local office, address where letters can be served, and the fine for non-submission (Rs 500 or Rs 50 per day if not paid on time) :
  • (It is appreciable that even in 1913 the law provided for operation outside British India.)

Bombay Securities Contracts Control Act, 1925

Enacted on 29th December 1925, it contained 6 sections, with details of the stock exchange, ready delivery contract, recognized stock exchange, etc.

The Capital Issues (Control) Act, 1947 

It was called act No. 29 of 1947 with 16 sections with names like company, issue of capital, a private company, prospectus, securities, states, control over issues of capital and control of advertisement of offer of securities for subscription, etc.

The central government by notification in gazette may grant the exemption for the operation of sections 3-5.

(I allow a youngster to do a research on how these provisions were used or never used)

The purpose of this article is partly historic and hence current ones after 1947 will not merit any importance for my study.

Let us go to  Abstract of the Proceedings of the Council of the Governor-General of India for the purpose of making Laws and Regulations.

Abstract of the Proceedings of the Council of the Governor-General of India for the purpose of making Laws and Regulations (The document includes some of the proceedings in respect of following Bills)

No. Date/year Particulars
1 December 20, 1867 Cotton Frauds’ Bill
2 November 18, 1870 Insolvency Bill
3 1870 Insolvency Bill
4 November 19, 1869 Contract Bill and Negotiable Instruments’ Bill
5 March 24, 1871 Indian Registration Bill (Registration of Assurances)
6 August 2, 1877 Indian Negotiable Instrument Bill
7 January 14, 1881 Indian Government Securities Bill
8 August 3, 1881 Indian Companies Bill
9 February 23, 1882 Indian Companies Bill
10 February 23, 1883 Rules of Business
11 March 13, 1885 Indian Securities Bill
12 March 18, 1913 The Indian Companies Bill

Let us look at some provisions of the Cotton Frauds’ Bill.

The discussions pointed out the ill effects of the bill by the introducer during the discussion but however, after detailed discussion, it was decided to refer to a select committee for deliberations.

The inclusion of Major General Shri H.M. Durand, Commander in Chief, was not surprising because of his vast knowledge over the matter. His commitment was equally appreciable.

Let us progress to Report on Bombay Stock Exchange Enquiry Committee – 1924 (Sir Wilfrid Atlay)

Now the time to know the realities at that time which forced an inquiry into the functioning of Bombay Stock Exchange as in 1924, perhaps, 97 years ago. Factually, the report will open up our attention to the then prevailing irregularities. The main report was signed by 6 members under the chairmanship of Mr. Wilfrid Atlay and the minority report was signed by Mr. Bhulabai J. Desai. 27 points of reference were made to the committee for inquiry.

The report was for 152 pages with 18 annexures. The reports ran 29 pages, inclusive of both reports.

Some of the observations of the main report on page 2, para 1-2 are as under:

“Yet, there is in the frequent fixing of prices by the Committee of Management, a more cause of criticism and complaint, and the method devised by the committee to combat corners, an undoubted evil in any market, has encouraged rather than checked the growth.

It is to us clear that order and confidence must be restored in a market where order and confidence are essential.”

 Do you feel the repetition of today in running of many stock exchanges being enacted nearly97 years ago?

Let us go through some of the recommendations of the committee as sane advice.

  • “Rules should provide for consideration of complaints by the public.
  • The dates of general meetings should be altered.
  • The Board should retire annually and should be called the Committee of Management.
  • The partnership rules should be rigidly enforced.
  • A minimum sale commission should be charged.
  • The hours of business should be extended
  • A common form of transfer must be used by all companies.

(20 Recommendations were given by the main committee and 4 in the minority report (which felt that there was not much substance in the complaint against the stock exchange and it should be dropped). Obviously, the majority report a masterpiece was implemented.

When one reads that history repeats, it looks ridiculous since one presumes humanity learns over a period of time but the reality on the basis of the above inquiry committee looks as if it has happened yesterday and correction needs to be done today.

Let us proceed with the next investigation report.

Report of the Stock Exchange Enquiry Committee – 1937 (Walter B Morison) 

It ran 177 pages with 7 appendices, 10 chapters with the following titles:

  • Introductory
  • General remarks
  • When the board may intervene: suspension of selling out rule, suspension of buying out rule, suspension of short selling, and power to close the market.
  • Inviolability of bargains
  • Other factors: control of sub-brokers, reduction of unhealthy speculation, a system of margins, fortnightly or monthly settlements, the minimum scale of brokerage, Principal’s or agency contract, the responsibility of a member of a firm, abolition of blank transfer, Scrips on the forward list.
  • Miscellaneous suggestions
  • Improvement of administrative machinery (11recommendations given)
  • Bombay Securities Contracts Control Act of 1925
  • Summary
  • Effect of recommendation

Let us look at some of the recommendations.

  • The board of directors should have only the power to suspend the buying in rule, short-selling rule, and that too with the consent of the government, the power to close the stock exchange for 24 hours, and with the permission of the government for a longer time.
  • Compromise in any form to avoid default must be prohibited
  • A member whose default has been brought about by speculation in his account must not be readmitted.
  • One who wants to work as remisier must deposit with association a sum of Rs 5000 and to pay an annual subscription of Rs 200 and get a clearance certificate from one broker if he wants to shift to another.
  • A list of 17 recommendations, 8 questions of interest in the welfare of the public, and a conclusion with the effect of recommendations.

Our observations

Looking like a management consultant’s report with precision and no vested interest, this report is of rare value and every student of stock exchange must read it.

Report on the Regulation of the Stock Exchanges in India – 1948 (P J Thomas) 

Let us indicate the names of chapters listed by the eminent economist Mr. P.J. Thomas.

  • History and present position of the Indian security market
  • Constitution and management of stock exchanges
  • The securities
  • Operations of the Security market
  • Security market as it should be
  • Security market as it is
  • Economic results of the security market
  • Should the security market be regulated?
  • Methods of control in other countries
  • Nature of regulation
  • Lines of regulation – proposals

Some of the recommendations stated in the report as if it were intended for today’s functioning: very clear, to move from muddled water towards safety, security, and wellness of the investing public.

Let us hear some of them:

1. Listing of regulation of stock exchange and provision for the government to make the rules and regulations for the proper functioning of stock exchanges.

2. Only one stock exchange in one city: no overlapping, no Mohalla stock exchanges, or more stock exchanges.

3. Provision for compulsory margins

4. Definition of the ready delivery contract

5. Regulate the function of jabbers/brokers

6. Compulsory training for stockbrokers

7. A schedule of minimum brokerage

8. Restriction in number of holidays

9. Increase in working hours of stock exchanges

10. Clearinghouses at every stock exchange

11. Over the counter, market to be regulated in case of fraud rules in London

12. Recommending sales tax on transactions with the proceeds to go to the state governments.

Total paras of 77 were provided to improve the working of stock exchanges.

I do not wonder about the evolution of SEBI since our ancestors indulged in total chaos, worked for their personal interests, and brought disasters to the investing public. Incidence of dabbling of steel shares and total manipulation due to world wars have been listed in the report.

A monumental report was written in a lucid style and hitting the corrupt practices indirect sense the report gets an outstanding grade from us.

Board Minutes of Stock Exchanges

Calcutta Stock Exchange (1910 to 1923)

Let me give some minutes to know the texture and style of maintenance of minutes in the 1900th century indicating a sense of responsibility and commitment to work.

 Board Minutes of Stock Exchanges

Calcutta Stock Exchange (1910 to 1923)

1. May 1910 to Nov 1919 ( I counted three meetings in 1910 complete with the presence of 7 or fewer persons generally at 3.00 pm to 5.00 pm.

2. August 1920 to March 1921

3. April 1921 to March 1922

4. April 1922 to March 1923.

It is too difficult to mention every minute which were written in long handwriting and not decipherable.

Bombay Stock Exchange (1973 to 1980)

1. January 1967 to December 1968

2. January 1971 to December 1980

Madras Stock Exchange

1. August 1937 to January 1938

2. April 1938 to March 1939

3. May 1939 to February 1940

4. April 1940 to March 1941

5. April 1941 to March 1942

6. April 1942 to March 1943

7. May 1943 to March 1944

8. April 1944 to March 1945

9. April 1945 to March 1946

10. April 1946 to March 1947

11. April 1947 to March 1948

12. April 1948 to March 1949

13.April 1949 to March 1950

14. April 1950 to March 1951

15. April 1951 to March 1952

16. April 1952 to Feb 1953

17. April 1953 to March 1954

18. April 1954 to Feb 1955

19. April 1955 to April 1956

At last, we have the following from the proceedings of Lok Sabha.

  Lok Sabha Debates-Securities Contracts (Regulation) Bills (Uploaded from the Lok Sabha Debates with the permission from the Hon’ble Speaker)  with Conditions

1. December 24,1954 – Securities Contracts (Regulation) Bill

2. November 28, 1955 – Securities Contracts (Regulation) Bill,1954

3. August 2, 1956 – Securities Contracts (Regulation) Bill, 1956


The purpose of this article is to deal with our past during the early 1900s which were wars in various parts of the world. I have given enough materials to amaze you with trepidation that our ancestors, many of them thought of investing as a means to make money, indulge in crooked ways to violate the procedures and misuse the official machinery to violate the rules but the results led India towards cleaner ways of doing business, the establishment of modern stock exchanges and saner ways of investing and helping the civilized world to evolve with proper rules and regulations. My great admiration for those great investigators who visited the whole world to study the operation of stock exchanges in the most advanced countries. Recommending the best suggestions for British India, they remain our heroes. As an investment student, my great admiration for their courage, knowledge, inquisitive to regulate with the best standards of the world of stock exchanges.

Yes, as per the expectations of our ancestors, India has emerged as a successful investment destination with a bright future.


Disclaimer: The materials taken from the SEBI web site is purely academic in nature intended to regale you with wisdom from the past. I am wholly responsible for my views. Neither nor SEBI is responsible for my views. Kindly treat this article for academic purposes only.

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