Section 36E: Regulations of self­regulatory organization

36E. Regulations of self­regulatory organization.—(1) Self­regulatory organization shall make regulations subject to prior approval of the Commission and such regulations shall contain following provisions, amongst others,— (a) for the protection of investors; (b) for manner of admission of its members; (c) code of conduct for the members; (d) for monitor conduct of its members; (e) relating to discipline of a member who contravenes its regulations or the provisions of this Act or any administered legislation and may provide for fine, suspension, expulsion, limitation of activities, functions or operations; (f) for specifying the procedure for disciplinary proceedings; (g) right of appeal of member of self­regulatory organization against any disciplinary action by the self­regulatory organization including manner and procedures in connection therewith; (h) for preventing fraudulent, deceptive and manipulative acts and practices and promoting fair trading practices; (i) obligation of members to provide information to the self­regulatory organization in the manner and frequency specified; (j) manner and frequency of submission of returns and information to the self­regulatory organization by its members; (k) arbitration mechanism in relation to any dispute between its members or between members and their clients; (I) for maintenance of books and records by the self­regulatory organization; (m) criteria for appointment of auditors of self­regulatory organization and the content of audit report; (n) for confidentiality of information available with the self­regulatory organization and its officers; (o) for inspection of members including audit by independent auditors to determine compliance with the law and provide opinion on such matters as may be specified; (p) for fair treatment to its members and any person who applies for membership; and (q) any other matters as may be specified. (2) The Commission may approve regulations of self­regulatory organization with or without modification or on its own motion, make or amend the regulations after giving due notice to the self­ regulatory organization. (3) The Commission may, by notice in writing served on a self­regulatory organization, require it to — (a) make regulations specified in the notice within the period specified; or (b) amend regulations referred to in the notice in the manner and within the period specified in the notice. (4) Where the Commission is satisfied that a self­regulatory organization has not complied with a requirement referred to in sub­section (3) within the period specified in the notice, the Commission may make or amend the regulations and the regulations so made or amended shall be deemed to have been made or amended by the self­regulatory organization and shall have effect accordingly. (5) Self­regulatory organization shall only admit the regulated persons which are granted a licence by the Commission or which are registered with the Commission under the laws administered by the Commission: Provided that the Commission may declare a class of persons connected with the financial services market who may be admitted by a self­regulatory organization as its members.

Effective date: 1997-01-01

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