Securities Market Code Bill introduced in LS

Finance Minister Nirmala Sitharaman on Thursday introduced the Securities Market Code Bill in the Lok Sabha and proposed referring it to the department-related standing committee for further discussion.

Arun Nehru (DMK) and Manish Tewari (Congress) opposed the Bill at the introduction stage, saying it gave excessive powers to a single body, which was against the principle of the separation of powers. They described the bill as a case of excessive delegation of power.

Responding to their claims, the finance minister said that since the government is referring it to the standing committee, such details can be discussed by the panel. Krishna Prasad Tenneti, chairing the proceedings, said the Lok Sabha Speaker has the powers to refer bills to Parliamentary panels, and he will take a call on the issue.

The Securities Markets Code Bill 2025 seeks to merge the provisions of the Securities and Exchange Board of India Act, 1992, the Depositories Act, 1996 and the Securities Contracts (Regulation) Act, 1956 into a unified code. It also aims to strengthen investor protection and improve the ease of doing business in the country’s financial markets.

The Code endeavours to build a principle-based legislative framework to reduce the compliance burden, improve regulatory governance, and enhance the dynamism of technology-driven securities markets, as per the Statement of Objects and Reasons of the Bill.

The language of the Code has been simplified to remove obsolete and redundant concepts, to eliminate duplication of provisions, to incorporate consistent regulatory procedures for standard processes, and to ensure a uniform and streamlined framework of Securities Laws, it said.

It is expected to develop further the financial sector in general and securities markets in particular, and to make India self-reliant in mobilising capital for productive investment, it added. As these laws were enacted decades ago, a review was required to reform the extant legislative framework to align with evolving regulatory practices, the latest developments in technology, and the changing character of securities markets, it noted.

The single securities markets code was first proposed in the Union Budget 2021-22, when Union Finance Minister Nirmala Sitharaman announced the plan to consolidate the Sebi Act, 1992, Depositories Act, 1996, Securities Contracts (Regulation) Act, 1956 and Government Securities Act, 2007 into a rationalised single securities market code.

With regard to investor protection, it said, the Code seeks to strengthen it, promote investor education and awareness, and ensure effective, time-bound redressal of investor grievances. It enables effective and prompt resolution of investor grievances by introducing the concept of an Ombudsperson as a comprehensive platform for redressal of any unresolved grievances.

The Code also enables the Board to establish a Regulatory Sandbox to facilitate innovation in financial products, contracts and services. Furthermore, an enabling framework is established to coordinate inter-regulatory activities for other regulated instruments, facilitating a seamless listing process.

In a bid to improve transparency, the Code seeks to strengthen the regulatory mechanism of the ‘Board’ by providing a transparent, consultative process for issuing subordinate legislation. “It also requires periodic review of such regulations for their proportionate and effective implementation and regulatory impact assessment studies. The Code seeks to eliminate conflict of interest by requiring the Members of the ‘Board’ to disclose any ‘direct or indirect’ interest while participating in decision-making,” it said.

It seeks the ‘Board’ to maintain a reserve fund and transfer the surplus, if any, to the Consolidated Fund of India, the code said, adding that it streamlines the adjudication procedure and ensures that all quasi-judicial actions are undertaken through a single adjudication process after an appropriate fact-finding exercise.