Finance Minister Nirmala Sitharaman on Thursday moved the Securities Markets Code Bill, 2025 in the Lok Sabha, which is aimed at providing a single, unified legislative framework to regulate 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.
Single Code for the Regulation of the Capital Market
The proposed Code, thus, would result in the consolidation and amendment of the existing laws related to the securities market with a view to strengthening the regulatory framework, enhancing investor protection, and improving efficiency and reducing the cost of doing business in India’s capital markets.
Stronger SEBI Powers and Simpler Law
Bill states that the Code would additionally empower the powers and governance structure of the SEBI, or the Board, while also adopting a principle-based legislative framework. At the same time, the law sanitizes the legal terminology to weed out obsolete and repetitive provisions to reduce regulatory ambiguity.
Faster Enforcement and Compliance Relief
The bill has proposed a single-window enforcement framework-one for all quasi-judicial orders. It has provided for a well-defined timeline for the completion of an investigation and issuance of interim orders. It has also stressed completing the entire enforcement proceeding in a time-bound manner.
Accordingly, for purposes of minimizing compliance burden, minor violation in nature criminal and procedural violations are proposed to be treated as civil offences. Only serious misconduct such as market abuse, failure to comply with quasi-judicial orders, and non-cooperation during investigations will attract criminal liability.
The Code also introduces increased transparency standards, including the requirement that members of the Board disclose any direct or indirect interests when participating in regulatory decisions.
Boost to Investor Protection and Innovation
The Bill also proposes establishing an Ombudsperson mechanism to strengthen investor grievance redressal. It also empowers SEBI to establish a regulatory sandbox in order to support innovation in financial products and services in a controlled regulatory environment. The proposed Act further requires that subordinate legislation, such as regulations and guidelines, be framed with greater openness and in a consultative manner to enhance predictability and regulatory clarity for the market participants.