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Informist, Thursday, Dec. 18, 2025

 

NEW DELHI – Finance Minister Nirmala Sitharaman introduced the Securities Markets Code Bill in Lok Sabha on Thursday. The bill seeks to overhaul the securities regulations in India and consolidate provisions of three laws -- the Securities and Exchange Board of India Act of 1992, Depositories Act of 1996, and Securities Contracts (Regulation) Act, 1956.

 

The bill, now referred to the Parliamentary Standing Committee on Finance, proposes measures to simplify governance, ease compliance, strengthen investor protection, and improve inter-regulatory coordination. The bill envisages putting in place a statutory framework to strengthen the Securities and Exchange Board of India and facilitate more efficient securities markets.

 

To strengthen the capital market regulator, the government, in the bill, has proposed increasing the number of SEBI board members to 15 from the current nine stipulated under the SEBI Act, sources from the finance ministry said. It has proposed new grounds for removal of board members if they acquire financial or other interests that prejudice their function.

 

The bill mandates SEBI board members to disclose any direct or indirect interests, including those of family members, related to the subject matter of the board meeting. It refrains the members from participating in the meetings where such interests exist.

 

The Securities Market Code Bill recognises the concept of market infrastructure institutions, which includes stock exchanges, clearing corporations, and depositories. The central government can notify new category of market infrastructure institutions, according to the bill.

 

The bill empowers the market infrastructure institutions to make bye-laws in line with current market practices and based on the principles laid out in the bill to ensure non-discriminatory access to its services, minimise market abuse, ensure interoperability with other market infrastructure institutions and foster transparency. It also proposes mandating public consultation by SEBI, market infrastructure institutions, and the Centre for market regulations.

 

The bill suggests allowing SEBI to delegate some part of its registration function to market infrastructure institutions and self-regulatory organisations. "The proposed bill provides an enabling provision for the SEBI Board to establish a regulatory sandbox to facilitate innovation in financial products, contracts and services," sources from the ministry said.

 

For investor protection, the bill proposes SEBI to issue an investor charter that provides the principles for protection of investors. It mandates SEBI to strengthen the grievance redressal mechanism for investors and designate one or more of its officers as ombudsperson to redress investor grievances effectively and in a time-bound manner.

 

To enhance the investment climate and market making, the bill provides an enabling framework for inter-regulatory coordination, wherein SEBI, in consultation with other regulatory authorities concerned, may make regulations for seamless listing of 'other regulated instruments'. The bill also suggests provisions for better coordination among market infrastructure institutions in terms of interoperability of any platform.

 

The bill has come to parliament after nearly four years from its announcement by Finance Minister Sitharaman in the Budget for 2021-22 (Apr-Mar). However, back then, Sitharaman had announced the consolidation of four laws through the bill--the three mentioned and the Government Securities Act of 2007. Sources in the finance ministry did not comment on why the Government Securities Act has not been included for consolidation in the bill.

 

About the rest of the three laws included for consolidation in the bill, the sources in the ministry said that the acts have many overlapping and redundant provisions. "The legislative architecture warrants a review and adaptation to evolving regulatory practices as per the latest developments in technology and the changing character of markets growing in scale and complexity," one of the sources said.   End

 

Reported by Krity Ambey

Edited by Ashish Shirke

 

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