Sitharaman introduces Securities Markets Code Bill to unify market laws
What's the story
Finance Minister Nirmala Sitharaman has introduced the Securities Markets Code Bill, 2025 in Lok Sabha. The proposed legislation seeks to create a unified framework for regulating India's securities markets by repealing and merging three existing laws: the SEBI Act, 1992; the Depositories Act, 1996; and the Securities Contracts (Regulation) Act, 1956. The move is aimed at strengthening regulatory architecture and improving investor protection.
Efficiency boost
Bill aims to enhance efficiency in capital markets
The Securities Markets Code Bill, 2025 also seeks to enhance the ease of doing business in capital markets. It proposes a principle-based legislative approach that would strengthen the powers and governance framework of the Securities and Exchange Board of India (SEBI). The language of the law has been simplified to remove redundant concepts, thereby improving regulatory clarity.
Compliance simplification
Streamlined enforcement mechanism and compliance ease
The Bill proposes a streamlined enforcement mechanism, ensuring all quasi-judicial actions are conducted through a single adjudication process. It also lays down specific timelines for investigations and issuance of interim orders, emphasizing time-bound completion of enforcement proceedings. To ease compliance, the Code proposes converting minor criminal and procedural contraventions into civil penalties while limiting criminal liability to serious offenses such as market abuse or non-compliance with quasi-judicial orders.
Accountability measures
Bill mandates transparency and accountability in decision-making
The Securities Markets Code Bill, 2025 also mandates greater transparency and accountability in decision-making. It requires members of the Board to disclose any direct or indirect interests while participating in regulatory decisions. This is aimed at ensuring that all decisions are made with full disclosure of potential conflicts of interest, thereby enhancing trust in the regulatory process.
Investor protection
Ombudsperson mechanism and regulatory sandbox proposed
To strengthen investor grievance redressal, the Code provides for an Ombudsperson mechanism. It also empowers the Board to set up a regulatory sandbox to facilitate innovation in financial products and services under controlled conditions. These provisions are aimed at ensuring that investors have access to effective grievance redressal mechanisms while promoting innovation in the capital markets.