THE GAZETTE OF INDIA
PART – III – SECTION 4
PUBLISHED BY AUTHORITY
NEW DELHI, JUNE 20, 2012
SECURITIES AND EXCHANGE BOARD OF INDIA
Mumbai, the 20th June, 2012
SECURITIES CONTRACTS (REGULATION) (STOCK EXCHANGES AND CLEARING
CORPORATIONS) REGULATIONS, 2012
No. LAD-NRO/GN/2012-13/07/13546 -In exercise of the powers conferred by sections 4, 8A and 31 of the Securities Contracts (Regulation) Act, 1956, read with sections 11 and 30 of the Securities and Exchange Board of India Act, 1992, the Securities and Exchange Board of India hereby makes the following regulations to regulate recognition, ownership and governance in stock exchanges and clearing corporations and matters connected therewith or incidental thereto, namely:—
Short title and commencement.
1. (1) These regulations may be called the Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2012.
(2) They shall come into force on the date of their notification in the Gazette of India.
2. (1) In these regulations, unless the context otherwise requires, the terms defined herein shall bear the meanings assigned to them below, and their cognate expressions shall be construed accordingly,–
(a) “Act” means the Securities Contracts (Regulation) Act, 1956 (42 of 1956);
(b) “associate” in relation to a person shall include another person:
(i) who, directly or indirectly, by himself, or in combination with other persons, exercises control over the first person;
(ii) who holds fifteen per cent. or more shares in the paid up equity capital of the first person;
(iii) whose director or partner is also a director of the first person or its subsidiary or holding company, or partner of the first person, as the case may be;
(iv) who is a holding company or a subsidiary company of the first person or a company under the same management as of the first person;
(v) who is a relative of the first person;
(vi) who is a member of a Hindu Undivided Family wherein the first person is also a member;
(c) “Board” means the Securities and Exchange Board of India established under the provisions of section 3 of the Securities and Exchange Board of India Act, 1992 (15 of 1992);
(d) “clearing corporation” means an entity that is established to undertake the activity of clearing and settlement of trades in securities or other instruments or products that are dealt with or traded on a recognized stock exchange and includes a clearing house;
(e) “clearing member” means a person having clearing and settlement rights in any recognised clearing corporation:
Provided that any person who, on the date of commencement of these regulations, is acting as clearing member of a clearing house or a clearing corporation shall be deemed to be clearing member, till his request for registration, if any, is refused by the Board or till cessation of his membership with clearing corporation, whichever is earlier;
(f) “company” shall mean a company as defined in section 3 of the Companies Act, 1956 (1 of 1956);
(g) “control” shall have the same meaning as assigned to it under clause (e) of sub-regulation (1) of regulation 2 of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 or any modification thereof;
(h) “governing board” means the board of directors of a recognised stock exchange or a recognised clearing corporation;
(i) “key management personnel” means a person serving as head of any department or in such senior executive position that stands higher in hierarchy to the head(s) of department(s) in the recognised stock exchange or the recognised clearing corporation or in any other position as declared so by such stock exchange or clearing corporation;
(j) “netting” means the determination of net payment or delivery obligations among the clearing members of a recognised clearing corporation by setting off or adjustment of the inter se obligations or claims arising out of buying and selling of securities, discontinuation of business, dissolution, winding-up or insolvency or such other circumstances as may be specified in the bye-laws of the clearing corporation;
(k) “novation” means the act of a clearing corporation interposing itself between both parties of every trade, being the legal counterparty to both;
(l) “persons acting in concert” in the context of acquisition or holding of shares or voting rights or control shall mutatis mutandis have the same meaning as assigned to it in clause (q) of sub-regulation (1) of regulation 2 of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 or any modification thereof;
(m) “public” includes any member or section of the public but does not include any trading member or clearing member or their associates and agents:
Provided that a public sector bank, public financial institution, an insurance company, mutual fund and alternative investment fund in public sector, that has associate(s) as trading members or clearing members, shall be deemed as public for the purposes of these regulations;
(n) “public interest director” means an independent director, representing the interests of investors in securities market and who is not having any association, directly or indirectly, which in the opinion of the Board, is in conflict with his role;
(o) “recognised clearing corporation” means a clearing corporation which is recognised by the Board under section 4 read with section 8A of the Act;
(p)”regulatory department” means a department of a recognised stock exchange or a recognised clearing corporation which is entrusted with regulatory powers and duties and includes such department as may be specified by the Board;
(q) “rules” means the Securities Contracts (Regulations) Rules, 1957;
(r) “shareholder director” means a director who represents the interest of shareholders, and elected or nominated by such shareholders who are not trading members or clearing members, as the case may be, or their associates and agents;
(s) “trading member” means a person having trading rights in any recognised stock exchange and includes a stock broker.
(2) Words and expressions used and not defined in these regulations but defined in the Act, the Companies Act, 1956, the Securities and Exchange Board of India Act, 1992, the Depositories Act, 1996 or any rules or regulations made thereunder shall have the same meanings respectively assigned to them in those Acts, rules or regulations made thereunder or any statutory modification or re-enactment thereto, as the case may be.