However, under section 18A of the Securities Contracts (Regulation) Act, 1956, derivatives traded on a recognized stock exchange and settled on the clearing house of the recognized stock exchange are valid.
The uncertainty with respect to the validity of  1  Equity Finance is a form of Securities Lending where the value of the transferred securities is more than the value of the cash received in exchange. 2  B.O.I Finance Ltd. v. Custodian and others, (1997) 10 SCC 488.