New Delhi: The government has unveiled ambitious plans to comprehensively overhaul the existing regulatory framework for the securities markets in the Indian subcontinent through the Securities Markets Code Bill, 2025, by trying to unify the existing three Acts through the Bill. The Union Finance Minister, Nirmala Sitharaman, moved the Bill in the Lok Sabha on Thursday.
According to reports, the new bill aims to repeal and replace the Securities Contracts (Regulation) Act of 1956, the Securities and Exchange Board of India Act of 1992, and the Depositories Act of 1996. The development aims to eliminate redundant provisions, outdated concepts, and align the law with modern market practices, technological advancements, and the expanding size of India’s markets.
According to the officials, the Code is intended to be a principle-based and consultative form of regulation that strikes a balance between rigorous supervision and flexibility, while facilitating capital mobilisation consistent with the requirements of a rapidly expanding economy. Through simplification of legal language, formulation of standardised regulatory processes, and rationalisation of compliance, this Bill seeks to ease regulation and facilitate business conduct in markets.
As per sources, the Bill enhances the powers and duties of SEBI by obligating it to evaluate its own performance from time to time, determine the proportionality of its regulations as a matter of importance for capacity building and research in the sector, and frame guiding principles to execute the Code. This Bill also formalises a transparent regulation-making procedure by making it compulsory for SEBI, MIIs, as well as the central government, to consult the public before making any binding rules or byelaws.
In a major reform move with a focus on ensuring better regulatory certainty, the Code explicitly carves out a demarcation between SEBI’s investigative and adjudicatory roles. There will be a separation between the conduct of inspections and investigations and the other enforcement activities, like giving notices and adjudication. There will be a timeline specified for completion of investigations and interim orders.
In a bid to ensure easy enforcement, the Bill removes the prosecution of minors to procedural offences and retains serious offences like market abuse offences, failure to comply with quasi-judicial orders, and failure to co-operate with investigators. This would be treated as civil offences with penalties proportional to gains or losses made or incurred, respectively.
The Code also recognises and formalises the Market Infrastructure Institutions, such as stock exchanges, stock brokers, and depositories, among other Market Infrastructure Institutions, to enable the government to designate new Market Infrastructure Institutions from time to time, as markets keep changing. Market Infrastructure Institutions would be empowered to make bye-laws not inconsistent with the Code regarding the promotion of non-discrimination, transparency, interoperability, and the prevention of Market Abuse. SEBI would also be enabled to give regulatory and registration powers to the Market Infrastructure Institutions and Self-Regulatory Organisations, sources underlined, adding, “Investor protection remains at the core of this legislation.”
“This Bill gives legal recognition to an Investor Charter, has provided for an overall grievance redressal mechanism, and has enabled SEBI to designate Ombudspersons to deal with investor grievances within stipulated time periods. Additionally, it has reinforced investor education initiatives with legal approval to the Investor Protection and Education Fund, out of which repayments to aggrieved investors can be made,” it said.