Stock Exchanges have been playing a major role in mobilizing private savings for industrial growth. With increasing participation of general public in securities association of themselves to regulate trading and to protect the interests of member brokers, is proving to be inadequate and detrimental to the interests of general investing public. With frequent market closures any payment crisis, the need has arisen to reexamine the system and suggest suitable regulatory policy measures which would focus on invisible but effective maintenance of market discipline and depend on strengthening of professional and financial support services which will make market work as they should. This paper examines some of these issues and suggests the following policy measures: 1. Collect margins on gross business and not on net business of a broker 2. Insulate investment business from speculative trading 3. Complete automation of stock exchange operations 4. Provide explicitly for investor protection in bye-laws of the stock exchanges 5. Strict enforcement of rules and regulations 6. Nominate active and knowledgeable public representatives on governing boards of exchanges 7. Establishment of unified regulatory body