Smart Contracts In Stock Trading
- IJLLR Journal
- Nov 15, 2025
- 2 min read
Vaishnavi N. Phule, DES Navalmal Firodia Law College
ABSTRACT
“Smart contracts are revolutionizing stock trading, but India’s legal system facing challenges to decode this digital disruption”. India's securities market has hitherto been overseen by the Securities Contracts (Regulation) Act, 1956 and the Securities and Exchange Board of India (SEBI), both using intermediated systems based on central points. With the emergence of blockchain technology, facilitated by Bitcoin (2009) and Ethereum (2015), smart contracts were launched: self-enforcing contracts on peer-to-peer decentralized networks. Elsewhere, the financial markets integrated blockchain to facilitate transparency and effectiveness. Startups and fintech companies in India also started venturing into the usage of its securities trading, settlement, and compliance. Legal challenges in stock trading through smart contracts in India arise from the gap between rapidly evolving blockchain technology and existing regulatory frameworks. Smart contracts, being self-executing agreements coded on decentralized networks, challenge traditional contract enforcement and regulatory oversight. India's current legal and regulatory systems lack comprehensive guidelines to govern stock trading through smart contracts. This gap creates uncertainty around contract enforceability, regulatory oversight, cross-border dispute resolution, and liability for automated errors or fraud. Addressing these concerns is essential for integrating smart contracts into India’s stock market. The law governing contracts and stock exchange should adapt to emerging technologies such as smart contracts in order to maintain investor protection and market integrity. Amend the Indian Contract Act, 1872, to explicitly recognize and regulate smart contracts. Develop SEBI guidelines for blockchain-based trading platforms and automated transactions. Ensure adequate cybersecurity and data protection are put in place for financial information. The researcher has undertaken this topic to, Analyze the present legal framework governing stock trading and smart contracts. Identifying gaps and challenges in the enforcement of smart contracts. Recommending legal and regulatory reforms to support and efficient smart contract-based trading.
Keywords: Legal Challenges, Legal Framework, Regulations, Smart Contracts, Stock Trading.
