Securities Markets Code Bill 2025

Context:

Finance Minister Nirmala Sitharaman introduced the Securities Markets Code (SMC) Bill 2025 in the Lok Sabha, marking the biggest overhaul of securities market regulations in decades. The Bill aims to unify and simplify India’s securities law framework.

Key Objective:

The Bill will consolidate and replace three major securities legislations:

1. Securities Contracts (Regulation) Act, 1956
2. SEBI Act, 1992
3. Depositories Act, 1996

Purpose & Scope:

The new code aims to:

• Establish a principle-based legislative framework
• Reduce compliance burden
• Remove outdated provisions
• Standardise processes
• Improve regulatory certainty

Notable Provisions:

• Functional separation in SEBI:
  • Distinct separation between SEBI’s fact-finding functions (inspections, investigations) and enforcement functions (show-cause notices, adjudication).
• Defined timelines:
  • Prescribed deadlines for investigations and interim orders to ensure faster resolution.
• Expanded SEBI Board:
  • Board size to increase from 9 to up to 15 members, including the chairperson.

Additional Features (Salient Points):

• Simplifies market rules and reduces paperwork.
• Introduces an ombudsperson to help investors settle unresolved disputes faster.
• Enhances transparency by requiring SEBI to consult stakeholders before rule changes.
• Strengthens governance by mandating SEBI board members to declare conflicts of interest.