law: Securities Contracts (Regulation) Act, 1956
  4.Grant of recognition
  
  to stock exchanges.-
  (1) If the Central
  
  Government is satisfied, after making such inquiry as may be necessary in this
  
  behalf and after obtaining such to further information, if any, as it may
  
  require,-
  (a)
  
  that the rules and bye-laws of a stock exchange applying for registration are
  
  in conformity with such conditions as may be prescribed with a view to ensure
  
  fair dealing and to protect investors;
  (b)
  
  that the stock exchange is willing to comply with any other conditions
  
  (including conditions as to the number of members) which the Central
  
  Government, after consultation with the governing body of the stock exchange
  
  and having regard to the area served by the stock exchange and its standing and
  
  the nature of the securities dealt with by its, may impose for the purpose of
  
  carrying out the objects of this Act; and
  (c)
  
  that it would be in the interest of the trade and also in the public interest
  
  to grant recognition to the stock exchange;
  it may grant
  
  recognition tot he stock exchange subject to the conditions imposed upon it as
  
  aforesaid and in such form as may be prescribed.
  (2) The conditions
  
  which the Central Government may prescribe under clause (a) of sub-section (1)
  
  for the grant of recognition to the stock exchanges may include, among other
  
  matters, conditions relating to,-
  (i)
  
  the qualifications for membership of stock exchanges;
  (ii)
  
  the manner in which contracts shall be entered into and enforced as between
  
  members;
  (iii)
  
  the representation of the Central Government on each of the stock exchanges by
  
  such number of persons not exceeding three as the Central Government may
  
  nominate in this behalf; and
  (iv)
  
  the maintenance of accounts of members and their audit by Chartered accountants
  
  wherever such audit is required by the Central Government.
  (3) Every grant of
  
  recognition to a stock exchange under this section shall be published in the
  
  Gazette of India and also in the Official Gazette of the State in which the
  
  principal office of the stock exchange is situate, and such recognition shall
  
  have effect as from the date of its publication in the Gazette of India.
  (4) No application for
  
  the grant of recognition shall be refused except after giving an opportunity to
  
  the stock exchange concerned to be heard in the matter; and the reasons for
  
  such refusal shall be communicated to the stock exchange in writing.
  (5) No rules of a
  
  recognised stock exchange relating to any of the matters specified in
  
  sub-section (2) of section 3 shall be amended except with the approval of the
  
  Central Government.