MUMBAI, July 19: The Securities Contract Regulation Act (SCRA) should confer exclusive powers to the Sebi and central government. The central government should retain powers only to make rules as per section 30 of SCRA while SEBI can be conferred with the authority of delegating the powers. This was one of the recommendations put forth by the Dhanuka Committee.

According to Justice Dhanuka, the existing act confers the power to the central government to take up an issue. SEBI, too, is given authority to act on the same. Citing the example of section 11 of the SCRA where both the central government and SEBI are given the power to supercede the governing body of a stock exchange, the committee said that such sections lead to parallel jurisdiction.

The committee has also called for the consolidation of the SCRA Act with the SEBI Act, 1992. Besides this, the committee has recommended that the SCRA should be a blanket regulation over the entire country, since as of date, the act provides that it would come into force on certain territories only on issue of a notification from the central government. These territories are neccesarily those areas which have no exchanges.

It has asked for the deletion of section 17 of the SCRA, which states that licensing of dealers in securities is required in those regions where the central government is needed to issue a notification for the implementation of SCRA, since this will be a redundant act.The committee has also recommended that the definition of securities under section 2 (h) of the SCRA should be widened so as to include the securities issued by any unincorporated body or units issued by a mutual fund or options in index securities and such other instruments which will entitle the owner to any type of property. These would include plantation schemes which are currently out of the regulatory ambit.

As regards options and futures, the committee has recommended that the SCRA should make a provision which states that such securities should be regulated. Section 20, which regulated these instruments earlier, has been deleted.

The committee has also recommended regulating the business of dealing in spot delivery contracts. This will put a curb on all the spot share shops which are currently not regulated.At present, according to SCRA regulation, spot deals also involve those deals done on the depository. The committee has therefore recommended that these deals should be excluded from the regulations and put solely under the depository regulations.

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