Securities Markets Code Bill, 2025

The Union Government has introduced the Securities Markets Code Bill, 2025, in the Lok Sabha to consolidate multiple legacy laws into a single code.

Why a Securities Markets Code Was Needed

India’s securities regulation was governed by three separate laws: the Securities Contracts (Regulation) Act, 1956, the SEBI Act, 1992, and the Depositories Act, 1996.
- These laws contained overlapping provisions, outdated definitions, and fragmented enforcement mechanisms.
Advances in technology, algorithmic trading, complex financial products, and market scale demanded a unified, principle-based legal framework.
The Union Budget 2021 had announced the intent to consolidate these statutes into a single Securities Markets Code.

Consolidation of Securities Laws: The SMC replaces and merges the three existing Acts into a single, comprehensive code.
Stronger SEBI Governance: SEBI Board strength expanded from 9 to up to 15 (Chairperson, 2 Central Government nominees, 1 RBI nominee (ex officio), and 11 members (minimum five whole-time members).
Conflict of Interest: Board members may be removed if they acquire any financial or other interests that may prejudice their official duties.
- Mandatory disclosure of Direct and indirect interests and interests of family members
Consultative Rule-Making: Introduces a transparent process for the issuance of subordinate legislation.
Streamlined Enforcement: Single adjudication process for quasi-judicial actions with clear timelines for investigation and interim orders, ensuring regulatory certainty.
Grievance Redressal: Creation of an Ombudsperson to address investor complaints.
Regulatory Sandbox: Empowers SEBI to promote innovation in financial products and services.
Inter-Regulatory Coordination: Enables seamless listing and regulation of instruments overseen by multiple financial regulators.
Decriminalisation of Minor Offences:
- Category I: Only civil penalties for fraudulent or unfair trade practices.
- Category II: Civil and criminal penalties for market abuse and serious violations harming market integrity and public interest.