Companies Act Section 2(73) Recognised Stock Exchange

Recognised Stock Exchange Section 2 (73)

A Recognised Stock Exchange (RSE) refers to a stock exchange that is authorized or recognized by the Securities and Exchange Board of India (SEBI) under the Securities Contracts (Regulation) Act, 1956. It provides a platform for trading in securities such as shares, debentures, bonds, and other financial instruments.

Key Characteristics:

1. Authorization by SEBI:

An exchange must obtain recognition from SEBI to operate as a Recognised Stock Exchange. SEBI grants recognition based on criteria such as infrastructure, governance, compliance with regulations, and market conduct norms.

2. Trading Platform:

RSEs facilitate the buying and selling of securities through a centralized electronic trading platform. 

They provide liquidity to investors and enable price discovery based on market demand and supply dynamics.

3. Regulatory Compliance:

Recognised Stock Exchanges must comply with SEBI regulations, guidelines, and directives related to market operations, trading rules, investor protection, transparency, and corporate governance.

They are responsible for monitoring market activities, ensuring fair and orderly trading, preventing market abuse, and maintaining market integrity.

4. Listing and Delisting:

Companies intending to offer their securities to the public can list them on a Recognised Stock Exchange after complying with listing requirements and disclosure norms.

RSEs may also initiate delisting procedures for companies that fail to meet continued listing criteria or regulatory obligations.

5. Investor Protection:

RSEs play a crucial role in safeguarding investor interests by ensuring transparency in trading, timely dissemination of information, effective surveillance mechanisms, and resolution of investor grievances.

Examples of Recognised Stock Exchanges in India:

National Stock Exchange of India Ltd. (NSE): 

Established in 1992, NSE is one of the leading stock exchanges in India, offering trading in equity, derivatives, debt securities, and currency futures.  

Bombay Stock Exchange Ltd. (BSE): 

Founded in 1875, BSE is the oldest stock exchange in Asia and provides a platform for trading in equity, derivatives, debt instruments, and mutual fund units.

Multi Commodity Exchange of India Ltd. (MCX): 

Recognised for trading in commodities and commodity derivatives.