SEBI to established a panel to review SCRA

The Securities Contract Regulation Act (SCRA), which has been in effect for 67 years, will be modified, according to plans by the Securities and Exchange Board of India (Sebi). The modifications are anticipated to streamline the statute and eliminate unnecessary clauses. Changes are likely to pertain to the regulatory framework for market institutions and Sebi’s authority to award punishments to the violators.

The SCRA is a crucial piece of legislation from which the stock exchanges and Sebi derive several operational functions. Since the Act was established by Parliament in 1956, it has undergone numerous revisions to catch up with emerging scenarios. SCRA is a key statute from the viewpoint of the derivatives market because it outlines the fundamental guidelines for such contracts.

Sebi operates by both Rules and regulations. Parliament is the sole body that has the authority to enact and alter Rules, like the Sebi Act. Sebi, on the other hand, establishes regulations that can be changed internally in its capacity as a market regulator. SCRA can only be amended by the Parliament.

SCRA offers Sebi the structure necessary to issue fines and begin criminal investigations for market infractions. Similar to a civil court, Sebi has the authority to provide orders and fine wrongdoers. However, Sebi must go via ordinary criminal courts to prosecute someone under criminal law. Although Sebi has only occasionally implemented the rule, preferring to penalise those who violate it, talks are already taking place to increase its authority in this area, according to sources.