RAS question
The Securities Contracts (Regulation) Act, 1956 is the primary legislation governing:
Correct answer: (B) Stock exchanges and securities transactions in India.
The Securities Contracts (Regulation) Act, 1956 primarily governs stock exchanges and securities transactions in India.
Explanation
The Securities Contracts (Regulation) Act, 1956 is the core law for regulating the business of dealing in securities. The SEBI-hosted text describes it as an Act meant to prevent undesirable transactions in securities by regulating such dealing, and it defines a stock exchange as a body formed to assist, regulate or control the business of buying, selling or dealing in securities. This matches the exam answer: the Act is not a general financial-sector law, but the framework for stock exchanges, listing-related regulation and securities transactions. It also recognises the role of the Central Government in recognising stock exchanges, with regulatory functions now associated with SEBI under the broader securities-law framework.
Why the other options are wrong
- (A) Insurance is outside the SCRA’s securities-market focus and is governed by the Insurance Act and IRDAI Act, not by the law regulating securities contracts.
- (C) Foreign exchange transactions are governed by FEMA, 1999, whereas the SCRA deals with contracts for the purchase or sale of securities.
- (D) Banking operations are governed by the Banking Regulation Act, 1949, while the SCRA regulates stock exchanges and dealing in securities.
Concept
This tests the Indian Economy syllabus area on financial markets and financial-sector regulation. It recurs in RAS because candidates must distinguish the legal regulators and statutes for securities, banking, insurance and foreign exchange.