The government on Thursday paved the way for corporatisation of bourses through amendments in Securities Contract Regulation Act in line with the suggestions made by the Joint Parliamentary Committee that probed the 2001 stock market scam.

The decision to amend SCRA was taken at a Cabinet meeting, chaired by Prime Minister Atal Bihari Vajpayee, official sources said.

The government sought amendments in the SCR Act of 1956 to ensure that stock exchanges can exist only in a corporatised and demutualised form.

Amendments in SCR Act were also necessary to incorporate the definitions of new financial instruments like derivatives, whose trading have been introduced in the stock exchanges in recent years.

These instruments are not explicitly mentioned in the SCR Act and hence require amendments.

Certain other sections of SCR Act dealing with the process of appeal and penalties also need to be amended in line with the changes carried out in the Sebi Act, sources said.

The government also plans to amend the Depositories Act of 1996, as new clearing-houses have been set up apart from the introduction of rolling settlement. Securities and Exchange Board of India introduced T+2 (transaction date plus two) rolling system last April and would move to T+1 system from April 2004.

Amendments in Depositories Act was also required to deal with the problems of delisting of shares.