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Section 8A of The Securities Contracts (Regulation) Act, 1956 in hindi

1[8A. Clearing corporation.--(1) A recognised stock exchange may, with the prior approval of the Securities and Exchange Board of India, transfer the duties and functions of a clearing house to a clearing corporation, being a company incorporated under the Companies Act, 1956 (1 of 1956), for the purpose of--

(a)the periodical settlement of contracts and differences thereunder;
(b)the delivery of, and payment for, securities;
(c)any other matter incidental to, or connected with, such transfer.

(2)Every clearing corporation shall, for the purpose of transfer of the duties and functions of a clearing house to a clearing corporation referred to in sub-section (1), make bye-laws and submit the same to the Securities and Exchange Board of India for its approval.
(3)The Securities and Exchange Board of India may, on being satisfied that it is in the interest of the trade and also in the public interest to transfer the duties and functions of a clearing house to a clearing corporation, grant approval to the bye-laws submitted to it under sub-section (2) and approve the transfer of the duties and functions of a clearing house to a clearing corporation referred to in sub-section (1).
(4)The provisions of sections 4, 5, 6, 7, 8, 9, 10, 11 and 12 shall, as far as may be, apply to a clearing corporation referred to in sub-section (1) as they apply in relation to a recognised stock exchange.]

Summary

A recognized stock exchange can move its clearing house duties to a separate company called a clearing corporation.
This transfer requires the exchange to get approval from the Securities and Exchange Board of India before it can happen.
The clearing corporation must be set up as a company under the Companies Act, 1956.
The main jobs of this corporation are to settle contracts, handle the delivery of securities, and manage payments.
The corporation must create its own set of bye-laws and get them approved by the Securities and Exchange Board of India.
Major rules that apply to stock exchanges, such as the power of the government to call for records or withdraw recognition, apply to these corporations too.

Practical examples

1The Mumbai Alpha Stock Exchange decides its internal settlement department is too busy. On June 12, 2025, it gets permission from the regulator to move all payment and share delivery tasks to a new company called Alpha Settlement Services Ltd.

2A clearing corporation called Beta Clear Corp fails to send its monthly reports to the regulator. Because Section 6 of the Act applies to it through Section 8A, the Securities and Exchange Board of India orders an official inquiry into its accounts on August 10, 2026.

3The Gamma Clearing Corporation wants to change how it handles defaults by its members. It writes new bye-laws and sends them to the Securities and Exchange Board of India for a formal review and signature before they can start using them.

FAQ

1. What is the primary purpose of a clearing corporation under Section 8A of The Securities Contracts (Regulation) Act, 1956?

Under Section 8A of The Securities Contracts (Regulation) Act, 1956, a clearing corporation is created to take over the duties of a clearing house, specifically for settling contracts, delivering securities, and handling payments.

2. Does a clearing corporation have to follow the same rules as a stock exchange under The Securities Contracts (Regulation) Act, 1956?

Yes, Section 8A of The Securities Contracts (Regulation) Act, 1956, states that the provisions of several other sections, including those regarding government inquiries and withdrawal of recognition, apply to clearing corporations just as they apply to recognized stock exchanges.

3. Who must approve the transfer of duties to a clearing corporation according to The Securities Contracts (Regulation) Act, 1956?

According to Section 8A of The Securities Contracts (Regulation) Act, 1956, the Securities and Exchange Board of India must provide prior approval before a stock exchange can transfer its clearing functions to a clearing corporation.

4. What happens if a clearing corporation is not acting in the public interest under The Securities Contracts (Regulation) Act, 1956?

Under Section 8A and by extension Section 5 of The Securities Contracts (Regulation) Act, 1956, the authorities can withdraw the recognition of the corporation if it is necessary for the interest of the trade or the public.

Test yourself

Q1.Under Section 8A of The Securities Contracts (Regulation) Act, 1956, which entity must a stock exchange get approval from before transferring clearing house functions?

Q2.If a clearing corporation is established under Section 8A of The Securities Contracts (Regulation) Act, 1956, how long is it required to preserve its books of account?

Q3.Under Section 8A of The Securities Contracts (Regulation) Act, 1956, what is the legal structure required for a clearing corporation?

Q4.If the Securities and Exchange Board of India wants to investigate the affairs of a clearing corporation, which section gives them that power through Section 8A of The Securities Contracts (Regulation) Act, 1956?

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