Investments made not disqualification for membership of stock exchange

Investments made by a member shall not be construed as business in deciding qualifications for membership of a recognised stock exchange

Rule 8 and of the Securities Contracts (Regulation) Rules, 1957 provide inter alia that no person shall be eligible to be elected or once elected continue as a member of a stock exchange seeking recognition if he  is  engaged  as  principal  or  employee  in  any  business  other  than  that  of securities or  commodity  derivatives except  as  a  broker  or  agent  not involving any personal financial liability unless  he undertakes on admission to sever his connection with such business.

However, it is provided that nothing herein shall be applicable to any specified corporations, bodies corporate, companies or institutions.

The Ministry of Finance has notified the Securities Contracts (Regulation) Amendment Rules 2025 amending the Securities Contracts (Regulation) Rules 1957.

It has been added that the investments made by a member shall not be construed as business except when such investments involve client funds or client securities, or relate to arrangements which are in the nature of creating a financial liability on the broker.

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