SECURITIES MARKETS CODE BILL, 2025

NEWS

• Union Finance Minister Nirmala Sitharaman has introduced the Securities Markets Code Bill, 2025 in the Lok Sabha.
• The Bill aims to consolidate and modernise India’s securities market laws.
• It has been proposed to be referred to the Parliamentary Standing Committee on Finance for detailed examination.

BACKGROUND

• India’s securities market is currently governed by three separate Acts:
  • Securities Contracts (Regulation) Act, 1956
  • SEBI Act, 1992
  • Depositories Act, 1996
• These laws have overlapping, outdated, and redundant provisions.
• The need for consolidation was first announced in Union Budget 2021.

KEY FEATURES OF THE SECURITIES MARKETS CODE BILL, 2025

1. Unified Legal Framework

• Replaces the three existing Acts with one comprehensive Securities Markets Code.
• Seeks to create a principle-based, technology-friendly regulatory architecture.

2. Expansion of SEBI Board

• SEBI members to increase from 9 to 15.
• Mandatory disclosure of direct or indirect conflicts of interest by Board members.
• Strengthens transparency and governance.

3. Enhanced Regulatory Powers

• SEBI can delegate registration functions to:
  • Market Infrastructure Institutions (MIIs)
  • Self-Regulatory Organisations (SROs)
• Provision for setting up a Regulatory Sandbox to promote financial innovation.

COMPLIANCE AND ENFORCEMENT REFORMS

• Decriminalisation of minor procedural and technical violations.
• Contraventions classified into:
  • Civil violations (fraud and unfair practices without criminal liability)
  • Serious offences affecting market integrity and public interest (criminal + civil penalties)
• Aims to reduce compliance burden and improve ease of doing business.

INTER-REGULATORY COORDINATION

• Enables coordination among financial regulators.
• Facilitates smoother listing of other regulated instruments.
• Improves interoperability among Market Infrastructure Institutions.

SIGNIFICANCE FOR INDIA’S ECONOMY

• Provides a modern statutory framework for:
  • Investor protection
  • Capital mobilisation
• Enhances confidence in India’s fast-growing, tech-driven capital markets.
• Marks the first large-scale overhaul of securities legislation in decades.