Nothing contained in this Act shall apply to stock exchanges or the clearing corporations of the stock exchanges.
Simplified Explanation
Section 34 of the Payment and Settlement Systems Act, 2007 provides an important exemption for stock exchanges and clearing corporations of stock exchanges from the applicability of this Act.
Key Provisions:
- Exemption: The provisions of the Payment and Settlement Systems Act do not apply to stock exchanges or the clearing corporations of stock exchanges.
This means that the regulatory framework and rules established by this Act are not applicable to entities involved in the trading of stocks and securities, such as stock exchanges and their affiliated clearing corporations.
Practical Implications:
- Independent Regulatory Framework:
- Stock exchanges and clearing corporations have their own regulatory bodies and frameworks, primarily governed by laws such as the Securities Contracts (Regulation) Act, 1956 and the Securities and Exchange Board of India (SEBI), which oversee their operations.
- Operational Autonomy:
- These entities have operational autonomy in terms of their settlement systems, and their payment and settlement systems are likely governed by the specific regulations established for securities markets, rather than by the provisions in the Payment and Settlement Systems Act.
- Avoidance of Duplication:
- This exemption helps avoid regulatory overlap and duplication, ensuring that stock exchanges and clearing corporations remain under the appropriate legal and regulatory jurisdiction tailored to their sector (e.g., SEBI’s regulations).
Conclusion:
Section 34 clarifies that the Payment and Settlement Systems Act does not extend its reach to stock exchanges and clearing corporations, recognizing the distinct and specialized regulatory environment these entities operate in under different laws. This helps streamline the regulatory process and ensures that these financial entities are governed by the appropriate sector-specific regulations.
