Securities Markets Code Bill 2025 tabled: A look at key proposals

The Securities Markets Code Bill, 2025, introduced in the Lok Sabha on Thursday (December 18), proposes a reorganisation of India’s securities law framework by consolidating multiple statutes and recalibrating regulatory, enforcement, and investor-protection mechanisms.

The Bill seeks to repeal and merge the SEBI Act, 1992, the Depositories Act, 1996, and the Securities Contracts (Regulation) Act, 1956 into a single, principle-based code governing securities markets.

Unified securities law framework

The proposed Code aims to simplify the legal architecture of capital markets by replacing fragmented legislation with a consolidated framework. The government said the move is intended to improve regulatory clarity, reduce overlap, and promote ease of doing business.

Strengthening SEBI’s regulatory role

The Bill proposes to strengthen the governance and regulatory mechanisms of the Securities and Exchange Board of India, referred to as the “Board”.

It mandates disclosure of any direct or indirect interests by Board members during decision-making, and seeks to introduce a more transparent and consultative process for issuing subordinate legislation such as regulations and rules.

Time-bound enforcement and single adjudication

To improve regulatory efficiency, the Code proposes a single adjudication process for all quasi-judicial actions. It also lays down timelines for investigations and interim orders, aiming to ensure time-bound completion of enforcement proceedings.

Decriminalisation of minor offences

The Bill proposes to convert minor criminal and procedural contraventions into civil penalties. Criminal offences are proposed to be retained only for serious violations, including market abuse, non-compliance with quasi-judicial orders, and non-cooperation during investigations.

Investor grievance redressal

To strengthen investor protection, the Code proposes the introduction of an Ombudsperson mechanism for the redressal of grievances. The measure aims to provide an additional, structured forum for resolving investor complaints.

Regulatory sandbox for innovation

The Bill empowers the Board to establish a regulatory sandbox to facilitate innovation in financial products and services. The sandbox framework is intended to allow controlled testing while managing regulatory and investor risks.

Principle-based, simplified legislation

The proposed Code adopts a principle-based legislative approach and simplifies statutory language by removing redundant concepts. The government said this is aimed at improving legal certainty and making the law more accessible to market participants.

The Securities Markets Code Bill, 2025 will now be taken up for further parliamentary scrutiny, including possible examination by a standing committee, before consideration and passage.