Sitharaman tables Securities Markets Code Bill: What it is, key features

Union Finance Minister Nirmala Sitharaman on Thursday introduced the 2025 Securities Market Code Bill in the lower house of Parliament. The Bill is aimed at consolidating multiple laws governing securities markets into a singular framework to reduce fragmentation and regulatory overlap.

 

The Bill was opposed by Dravida Munnetra Kazhagam's (DMK's) Arun Nehru and Congress's Manish Tewari. The leaders said that it gave excessive powers to one body. However, Sitharaman said since the government is referring it to the standing committee, such details can be discussed by the panel.

 

Here's a breakdown of what the Bill is and what it aims to change.

What is 2025 Securities Markets Code Bill?

The Bill aims to replace the 1992 Securities and Exchange Board of India Act, the 1956 Securities Contracts Regulation Act, and the 1996 Depositories Act. It also proposes measures to better protect investors and make it easier to do business in India’s financial markets. It also proposes to replace old laws and remove repeated rules, creating one clear and uniform system for securities markets.

 

The single securities markets code was first proposed in the Union Budget 2021-22, when 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.

What will the Securities Markets Code Bill do?

• Makes market rules simpler and easier to follow, reducing paperwork for companies.
• Improves investor protection by increasing awareness and ensuring complaints are resolved quickly.
• Introduces an Ombudsperson (neutral, impartial official) to help investors settle unresolved complaints faster.
• Allows Sebi to maintain a reserve fund and transfer the surplus, if any, to the Consolidated Fund of India.
• Helps different regulators work together smoothly, especially for listing new financial products.
• Improves transparency by requiring Sebi to consult stakeholders before making new rules.
• Requires regular reviews of regulations to ensure they remain fair and effective.
• Prevents conflicts of interest by requiring Sebi members to declare personal interests before making decisions.
• Ensures better financial discipline by requiring Sebi to maintain a reserve fund and transfer surplus funds to the government.

Code promotes fair penalties

The Code promotes fair and timely enforcement by clearly separating investigation from decision-making and setting fixed timelines for completing cases. Minor, technical or procedural violations will no longer be treated as criminal offences and will instead attract civil penalties, reducing pressure on businesses.

 

These penalties will be based on the actual gains made or losses caused, ensuring punishments match the seriousness of the offence. At the same time, serious offences such as fraud and market abuse will continue to face strict action. The Code also sets time limits for starting investigations to prevent delayed enforcement.

Need for Securities Markets Code

According to the government, the existing laws are very old and do not fully match the current markets and technology. The new Code updates the rules to suit modern, fast-growing markets. The Bill also aims to make India self-reliant in raising money for businesses and development.