Securities Markets Code Bill, 2025

Why in News?

In a major overhaul of the Indian securities market regulations, the Securities Markets Code (SMC), 2025 was tabled in Parliament.

• Aim – To strengthen investor protection, streamline compliance, and enhance the Securities and Exchange Board of India (SEBI)’s regulatory powers.

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Key Provisions of the bill

• Consolidation of Laws – It replaces and merges 3 existing securities laws and creates a unified legal framework for securities regulation –
  • Securities Contracts (Regulation) Act, 1956 (SCRA),
  • SEBI Act, 1992, and
  • Depositories Act, 1996.
• Composition – The Board strength increased from 9 to 15 members for better governance.
• Enhanced Powers for SEBI – SEBI gains stronger oversight over Market Infrastructure Institutions (MIIs) like stock exchanges and depositories.
• Delegation of Functions – SEBI can delegate parts of its registration work to MIIs and Self-Regulatory Organisations (SROs).
• Disclosure of ‘conflict of interest’ – If a SEBI board member (or their family) has any direct or indirect interest in a matter, they must declare it and stay out of the decision-making on that issue.
• Categories of Contraventions –
  • Fraudulent & Unfair Practices - Minor violations (like unfair trade practices). It only attracts civil penalties but not criminal liability.
  • Market Abuse – It is a grave violation that harms market integrity and public interest, attracts civil penalties, and may also be treated as a criminal offence.
• Investor Protection
• SEBI will create an Investor Charter to safeguard investors and encourage participation.
• SEBI will set up an Investor Grievance Redressal Mechanism.
• Securities Markets Service Providers (SMSPs) & issuers must also establish similar grievance mechanisms.
• SEBI can appoint Ombudsperson(s) from its officers to handle investor complaints fairly and within a fixed time frame.
• International practice – It brings in global standards for governance, accountability, and transparency & introduces regulatory impact assessment to measure the effects of new rules.

Comparison between the Old Framework & the New Bill

Reference

Indian Express | Securities Markets Code Bill, 2025