Finance Minister Nirmala Sitharaman on late Thursday evening introduced the Securities Markets Code Bill, 2025 in the Lok Sabha, aimed at consolidating and replacing three existing securities laws with a single, modern framework.
The Securities Markets Code Bill, 2025, introduced in the Lok Sabha, proposes to repeal and consolidate the SEBI Act, 1992; the Depositories Act, 1996; and the Securities Contracts (Regulation) Act, 1956, into a single, unified legislative framework focused on investor protection and efficient capital mobilisation.
As per government statements, this represents a landmark reform—the first comprehensive overhaul of securities market laws in decades—aimed at boosting broader investor participation and scaling up capital raising to support India's rapidly expanding economy.
The current framework relies on multiple outdated statutes from different eras, often featuring overlapping and redundant provisions. The new Securities Markets Code (SMC), 2025, adopts a principle-based approach to streamline these laws, ease compliance burdens, bolster regulatory governance, and better accommodate the evolving, technology-driven nature of modern securities markets.
The language of the Code has been simplified to remove duplication, omit redundant concepts and introduce consistent regulatory procedures, ensuring a uniform and streamlined securities law framework.
The Bill proposes to strengthen the regulatory mechanism of the Securities and Exchange Board of India (SEBI) by expanding its board from the current nine members to up to 15 members, including the Chairperson. It also introduces a transparent and consultative process for issuing subordinate legislation.
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To address potential conflicts of interest, the Code mandates disclosure of any direct or indirect interests by board members during decision-making.
The legislation also streamlines enforcement procedures by introducing a single adjudication process for all quasi-judicial actions, following a structured fact-finding exercise. It maintains an arm’s-length separation between investigation and adjudication, and lays down timelines for investigations and interim orders to ensure time-bound regulatory action, providing greater clarity and certainty to market participants.
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As a significant reform measure, the Code decriminalises certain minor, procedural and technical contraventions by converting them into civil penalties, with the objective of improving ease of doing business and reducing compliance burden. Criminal provisions are retained only for cases involving market abuse, non-compliance with quasi-judicial orders, and non-cooperation during investigations.
The Bill also seeks to strengthen investor protection through enhanced investor education, awareness initiatives and a time-bound grievance redressal mechanism. It provides for the establishment of an Ombudsperson to address investor complaints.
In addition, the Code empowers SEBI to set up a Regulatory Sandbox to encourage innovation in financial products, contracts and services. It also establishes an enabling framework for inter-regulatory coordination to facilitate seamless listing of regulated instruments.
Overall, the proposed legislation aims to further strengthen SEBI, promote efficient and transparent securities markets, improve regulatory governance and enhance investor confidence, the statement said.
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