"No country in the world has an outright prohibition on forward contracts in securities as mentioned in sections 13 and 16 of the Securities Contracts (Regulation) Act 1956," Assocham said in a statement.
"They were enacted to solve problems of a different era and should be repealed in entirety," it added.
It asked the government to allow genuine non-speculative contracts like forwards, call/put options, buybacks, right of first refusal and preemptive rights in commercial agreements.
It said speculation was not considered bad anymore as it not only provided liquidity and price discovery in the market but often offered trades on the other side of hedgers.
"If speculation is banned, traders who want to hedge their trades will be worse off and frequently let without the ability to hedge their risk," said Secretary General DS Rawat.
Second, most trades in secondary market, particularly exchange-traded futures, can be categorised as speculative.