<b>XIII LOK SABHA DEBATES, <i> Session II (Winter Session) </i> </b>
XIII LOK SABHA DEBATES, Session II (Winter Session) Tuesday, November 30, 1999/Agrahayana 9, 1921 (Saka )

Title: Discussion on Securities Laws (Amendment) Bill, 1999 and Securities Laws (Second Amendment) Bill, 1999.

1501 hours

MR. DEPUTY-SPEAKER: Hon. Members, Government have recommended two hours for the combined consideration and passing of (i) Securities Laws (Amendment) Bill, 1999; and (ii) Securities Laws (Second Amendment) Bill, 1999. If the House agrees, both the Bills may be taken up together for consideration and passing and two hours may be allotted for this purpose. Does the House agree to this?


MR. DEPUTY-SPEAKER: The Minister may now move for consideration of the two Bills.


"That the Bill further to amend the Securities Contracts (Regulation) Act, 1956 and the Securities and Exchange Board of India Act, 1992, be taken into consideration."

"That the Bill further to amend the Securities Contracts (Regulation) Act, 1956, the Securities and Exchange Board of India Act, 1992 and the Depositories Act, 1996, be taken into consideration."

Sir, the Bill proposes to expand the definition of securities under the Securities Contracts (Regulation) Act, 1956 and to include derivatives and instruments of collective investment schemes. This would enable development and regulation of markets for derivatives of securities and units of collective investment. The Bill also proposes to authorise the Central Government to delegate powers to the Reserve Bank of India under this Act. This would enable the RBI to regulate transactions in Government securities and other related instruments as may be specified by the Government.

In the last few years, Sir, there have been substantial improvements in the functioning of the capital market. Risks have been reduced by requirement of adequate capitalisation, margining, establishment of clearing corporations in stock exchanges, etc. Systemic improvements have been made by introduction of screen-based trading and depositories to allow book entry transfer of securities and so on. However, there are inadequate advanced risk management tools. With a view to promoting and providing such tools and to strengthen and deepen the markets, there is an urgent need to allow derivatives trading in securities for which the infrastructure, rules and regulations are ready. SEBI has already drawn up a detailed regulatory framework under which stock exchanges, clearing corporations, clearing houses would be permitted to carry on derivatives trading and settlement. This constitutes a major component of economic reforms process in the securities market. The Bill, therefore, proposes to include derivatives within the ambit of securities in the Securities Contracts (Regulation) Act, 1956, thereby trading in derivatives may be possible within the framework of this Act.

Sir, recently, many companies, specially plantation companies, have been raising resources from investors which are in the form of collective investment schemes. However, the existing regulatory framework is not adequate to allow an orderly development of this market. In order that the interest of investors is protected, Government took a decision that SEBI would frame regulations with regard to collective investment schemes which would include, instruments such as agro-bonds to enable the SEBI to regulate collective investment schemes and develop the market for the same effectively. The Bill proposes to amend the definition of securities under the Securities Contract (Regulation) Act, 1956 so as to include these instruments as well as the units of collective investment schemes within its ambit.

Sir, the Securities Contracts (Amendment) Bill, 1998 was introduced in the Lok Sabha on 4th July, 1998. The Bill was later referred by the Hon. Speaker, Lok Sabha to the Standing Committee on Finance on 10th July, 1998 for examination and report thereon. The Committee submitted their report on 17th March, 1999. Many of the important recommendations of the Committee have been accepted by the Government and incorporated in the Bill. Thus the Bill aims to protect the interests of investor while promoting an orderly market for trading in derivatives and units of collective investment schemes.

This, Sir, is the first Bill that I move with your permission.

The second Bill, Sir, relates to the amendments of the Securities Laws (Second) Amendment Bill, 1999, no. 68 of 1999.

Sir, in order to bring greater transparency and impartiality of appellate body, the Bill proposes to amend the Securities Laws, namely, the Securities Contracts (Regulation) Act of 1956, the Securities and Exchange Board of India (SEBI) Act of 1992 and the Depository Act of 1996 to empower the Securities Appellate Tribunal to dispose of all appeals under these Acts instead of the Central Government.

Sir, at present, the appeals from the SEBI lie with the Central Government. It is our proposal that these appeals should lie with the Appellate Tribunal which already exists under the SEBI Act. We are bringing this amendment to take this power away from the Government, from the Ministry of Finance, and empower the SAT to deal with this. The Presiding Officer of the SAT has been consulted in this matter. He has suggested that the Securities Laws may be amended to delegate these powers to SAT. And, this is what we are proposing to achieve through this Amendment.

Sir, with your permission, I move that both these Bills be taken into consideration.

SHRI BASU DEB ACHARIA (BANKURA): Are both these Bills taken together?

MR. DEPUTY-SPEAKER: For discussions, yes, together.

SHRI BASU DEB ACHARIA :But it has not been mentioned in the Order Paper of today that item no. 24 and 25 would be taken together.

MR. DEPUTY-SPEAKER: The House has agreed. Just now, I have read out and the House has agreed. There is not much of a difference in that.

SHRI BASU DEB ACHARIA : But the sense of the House has not been taken.

SHRI YASHWANT SINHA: The sense of the House has been taken, Shri Basu Deb Acharia.

SHRI BASU DEB ACHARIA : When was it taken?

SHRI SOMNATH CHATTERJEE (BOLPUR): Let everything not be thrown to winds. But Members have to be told. Of course, we would not have objected to it but courtesy demands that the hon. Minister takes leave of the Chair before he goes on to the second Bill.

MR. DEPUTY-SPEAKER: The proposal had come and I put it before the House, and nobody objected to it.

SHRI SOMNATH CHATTERJEE : Some norms be maintained.

SHRI YASHWANT SINHA: Sir, this point has to be clarified. I must state that it was the hon. Deputy-Speaker who took the sense of the House. It was only with his persmission that I took both these Bill together.



SHRI BASU DEB ACHARIA : I think, the sense of the House was not taken.

MR. DEPUTY-SPEAKER: Now, I think, if the House has no objection, we can go ahead with it

SHRI SOMNATH CHATTERJEE : Sure, Sir. The sense of the House is retrospectively given.

MR. DEPUTY-SPEAKER: Motions moved:

"That the Bill further to amend the Securities Contracts(Regulation) Act, 1956 and the Securities and Exchange Board of India Act, 1992, be taken into consideration."

"That the Bill further to amend the Securities Contracts (Regulation) Act, 1956, the Securities and Exchange Board of India Act, 1992 and the Depositories Act, 1996, be taken into consideration."


V.B. ɮɮ (nE]) : +nhҪ ʺx V E iɮ ɪ Mɪ ʺEʮ]V (Eb +b]) ʤɱ E ʴɮv Ex E ʱB Jc + * J { ix q E >{ɮ V ɽ +b] ɪ Mɪ , =E ʴɮv Ei * ɤɺ {ɽ vx =x J Ec {VxɴE E iɮ Vi Vxx {ɽ < +ɺ + =n E l Ec {ɪ Mɪ* BO {]ƺ E{xɪ Vc < + E{xɪ E iɮ xɪ Mɪ Exx E ɴVn =x M E Ec {ɪ bڤ Mɪ, i E{xɪ E] +ɱ{ Mɪ V {ɽ n i E Ehb + l* =E J Ec {ɪ E ʽɤ + iE ֱE E ɨx xɽ +ɪ*

ʺx V, Z nںɮ BiɮV < +b] E >{ɮ ɽ E xɪn { ɽ ʴvx E =x ɴx+ E Jɱɡ Vɺɺ ]] E {ɺ +{x b + +{x Ji E +vEɮ * ɽ V +b] +{ E +ɪ , =xE <xʣVɨ] * Z i ɽ M E EU xEɽ E ɽ ɽi c Vɶ E ʺEʮ] BESV b + <b E <ix iEiɴɮ E n Vɪ, <ix Vɤi E n Vɪ E {ɽ V Ec {ɪ M E bڤ , + +M ɽ +{x =x {ɮ{ɮ+ {ɮ Sɱi *

+nhҪ b{] {E ɮ, +{E vx < i E iɮ Vx Sɽi E j V x < +b] E J + c ʴɶɺ E l E E < Mֱ] Ex n E + M E ɱ M* j V, +{x nJ M, ɽi {j ʨɱ , + xxҪ n E {j ʨɱ M, +V EU ɱ {ɽ +Jɤɮ ɽi c Bb]<Vɨ] +B l E +{ <x BO {x]x { M<B* M x =ɨ vcvc { MB* Vɤ E <E ɮ {ciɱ Ex E ʱB E Mɪ, Jɱ 1995 V vJvc E M<, =E ɮ V i <, Z =E Yx E =x Bb]<Vɨ] E vJ +E M x +{x { MB* n ɮ nEx n M<* < +b] ʤɱ E ʴɮv Ex E J { BE En ɽ E +{ =x M E <ix iEi + Ei |nx E Vxx {ɽ +{E ʴɶɺ b֤ɪ * <ɺ +x ɱ ɨɪ E< ɪn xɽ M* Jɱ {ʱǪɨ] E < q {ɮ ɽi +v J Mɪ * ɽ i <ʱB Ex Sɽi EE x =x M E ʱB ɮi * {Vɤ B EU Ex l, {ɮ-E{] <xEɴ<W ɮ ]] E M x b<ǴɺʡEx + BOESɮ E xɮ E iɽi =ɨ +{x <ix { M nB E =E n Ex E JnEֶ Ex E ʱB Vɤڮ x {c* Ec E inn ɮ Ex x JnEֶ E* + ] i {ɮ < +b] E BE + q E iɮ +{E vx nx Sɽi * +{E < ɮ ɽ Zɴ nx Sɽi E B Vx +lɴ B Vx ɴɺl +Sɱ ɨ{ii |{i Ex E nʹ] xɴEɮ uɮ ɦ +ƶnx +lɴ Mix E |ʴʹ] +x i E l-l ɨ{ii, Vɺɨ Eʹ ʨ ʽi ɨ{ii E ʤF {ɮ {M ʨʱi , ɮi E ʴvx E ʴɯr EE Exp ɮEɮ Eʹ ʨ Ƥvi q {ɮ Exx xɽ x Ei, EE ɽ ʴɹɪ V E +iMi + ɮi E ʴvx E +xSUn 246(2) nB MB |ɴvx E +xֺɮ x SʽB* ɽ =E +xֺɮ xɽ + ɽ <bx Ex]]ڶx E =Px * < +b] EU xEɽ + ʺEʮ] BESV b + <b E EU +ɮ ʽx, E E >{ɮ <Wɨ xɽ Mx Sɽi Ex ɽ i ʤɱEֱ iɪ E Ec-+ {ɪ E ] ʺEʮ] BESV b + <b E ɽi c-c +ɮ x E * + =x E l <ix c Ei n nx, ɽ i Z `E xɽ Mi* Sɱ ɨ{ii |{i Ex E =q䶪 xɴEɮ uɮ Vx +lɴ ɴɺl EB MB ɦ +ƶnx +lɴ Mix E |ʴʹ] + <ɺ +M VE {nɴɮ |{i Ex E nʹ] {V xɴEɮ uɮ E Vx +lɴ ɴɺl EB MB ɦ +ƶnx +lɴ Mix, + < Bb] V E Mɪ , <ɺ Bxx E ɤi E { niɴV +li

... (ɴvx)

DR. NITISH SENGUPTA (CONTAI): Mr. Deputy-Speaker, Sir, I am on a point of order.

MR. DEPUTY-SPEAKER: Shri Brar, he is on a point of order.

... (Interruptions)

MR. DEPUTY-SPEAKER: What is your point of order? Under what rule are you raising your point of order?

DR. NITISH SENGUPTA : The hon. Member mentioned that the SEBI has ... (Interruptions)

MR. DEPUTY-SPEAKER: Please quote the rule.

... (Interruptions)

MR. DEPUTY-SPEAKER: There is no point of order.

V.B. ɮɮ : xɽ, ɺ BE-n {<] + , = E Vn Ei xɽ M*

|iɦi + ʴn Mֱx +vxɪɨ, 1956 E < ʤɱ E Jb n E 2(BS) E vɮ, V +{x <ɨ |Eʶi E , <ɨ ƶvx E Vɪ iE E ɨʽE xɴ Vx uɮ Vɮ E Mɪ xɪ +lɴ E +x niɴV E xɴE E ʱB ʨʱi E Vɪ* ɽ < vɮ n M< |iɦiɪ E {ʮɹ E +xiMi *

BE Zɴ +xi + * |iɦiɪ iǨx {ʮɹ ɮ, F{ + V v {j il x ɨxv niɴW , =ɨ ɨʽE {V xɴ Vx E |ɺiʴi {ʮɹ E = M ʨɱ xɽ E V Ei, EE EE] <x]] EҨ, V +{E ɨʽE {V xɴ Vx , =E +{x +{ɨ E< B]] xɽ + < ɨʽE {V xɴ |ɤxv E{x uɮ Vɮ E V Ei * xxҪ j ɽn <x n q E >{ɮ {ɹ]Eh n* <ɺ Ex E + MɮҤ M E ] + gM* iEi + Ei <ɺ gM* 1995 E Mɪ E {ʱǪɨ] {U ʤx ʺEʮ]W Bb BESV b + <b x +{x i {ɮ BE Mֱx Vɮ E n l + n =E ɮ = E <x E Mɪ* j V +{ n E ɽi Eʤɱ JVx j , ɮ +{E BE{ʮBƺ ʱɪEi E >{ɮ E< E xɽ , Ex ɽ i +{E xx SʽB E n E <ix c ɨɺ+ Pɮ B ֱE E B Vi E +{E {gx E Ei x ʨɱ * < Exx + Bb] c xEx M* xEɽ, +ɮɽ + EU +vEɮ +{x {ɺ h]ű<Vx + {ɴɮ Ex Sɽi * ɮiҪ Vxi {] x i ɮ n < i E >{ɮ ] ʱɪ E bҺh]ű<Vx ɮ q + Vn {ɴɺ +{ ]] E nM* Ex < Exx , ɽ xx E +{ v <xʣVɨ] E , V +vEɮ ʴvx E uɮ ]] E n Mɪ , =xE >{ɮ +{ <E uɮ BE vɤ M *

< Eb Bb] ʤɱ E Ec ʴɮv Ei + vx =x J M E iɮ Vi , VxE l <ix c ʴɶɺPi + * Vɤ ɽ +x ɮEɮ x {ciɱ Ex E E i x c Jڤɺڮi E l ɮ Eɮ-+{ E n + =x M E <xɡ xɽ ʨɱ E*

<x ɤn E l +{E +ɦɮ Ei Ei * vxɴn*

E] (֨< =iiɮ-{ڴ) : ɨxxҪ ={vI ɽn, ɤɺ {ɽ xxҪ j ɽn E Mi EM* <x nx ʤɱ E ɨlx Ex E ʱB Jc + *

ɦMɽ E, nx E VxEɮ E ʱB ix Sɽi E <x nx ʴɹɪ E >{ɮ Ƥ< < E] <x] OɴƺW E +vI E xi x {ʤE <]] ʱ]Mx < E l* = E +vI * Ƥ< xɽ, {ڮ n ɮ E <x] x V E{] V l, <x nx EW Ƥ< < E] x V VVɨ] n , ɽ U] <x] E ɮ n * = E iiɴvx nx ʤɱ ɽ {ɮ ɪ Mɪ *

<x nx ʤɱ E Mi Ei * Eɶ! nx ʤɱ Sɮ-{S ɹ {ɽ +B i, i n ɮ , nx E VxE +ɶSɪ M, MɦM 22 J U] <x] E 12 Vɮ Ec {B bڤ xɽ Vi* < ʴɹɪ E <x] Oɴƺ E +vI E xi {ڴ |vx j, xxҪ nMb V + xxҪ MVɮɱ V ɨx x SS E* + nx ʤɱ nx |ɺii B , <xE Mi Ei * xxҪ ʴii j V E EU Zɴ nx Sɽi + EU Eɮxɨ E ɮ VxEɮ nx Sɽi *

nx + {Vɤ E ɮ i Sɱ l* {Vɤ E BE E{x Mbx ɮ] E{x * nx E ɽ VxE +ɶSɪ M E < E{x x U]-U] <x] 1100 Ec {B ɺڱ EB, VɤE < E{x E {b-+{-<E]-E{] 11 J {B + <E ɮ-b Mɮ * ɽ BE ʨʱ E{x * + xxҪ n x `E E, U]-U] <x] + Ex E ɨx vڱ E n M< * =xE l S]M < , b + * +{x ]Ҵ +x֦ɴ-{x]x E + BE ʴY{x nJ M* =ɨ BE {v nJɪ Mɪ + V xx-xx ʤ] E Sj nJɪ Mɪ + E Mɪ E +{E ʤ] vҮ-vҮ c M + 21 ɱ E n =E n-ɽ E ʱB { E +BM? +<B, +x֦ɴ-{x]x { M<B, n Vɮ {B n nVB + 21 ɱ E n 21 J {B {x]x E{x =xE nM* B BE xɽ +xE E{xɪ , Vxx 21 ɱ E n E SE Bbƺ J * ɺiʴEi ɽ E U: ɽx E n SE xɽ Sɱi , Ex SE < EB MB* xxҪ j V uɮ |ɺii <x nx ʤɱ E ɨlx Ei , Ex < |Eɮ E E{xɪ E Jɱɡ E< EɪǴɽ xɽ E M< * nx-nc <ix { E ] < , S Sɱ Mɪ + + nV {ɮ iɱ ɮx E ʱB xE * < E] x VxEɮ n,


x VxEɮ n + Mi {iɽ x +vEʮ SS E* iɪ Mɪ E