Finance Minister Introduces Securities Markets Code Bill in Lok Sabha

Finance Minister Nirmala Sitharaman introduced the Securities Markets Code Bill, 2025, in the Lok Sabha on December 18, 2025. The Bill proposes a consolidated legislative framework for India’s securities markets by repealing and merging three existing laws, the SEBI Act, 1992, the Depositories Act, 1996, and the Securities Contracts (Regulation) Act, 1956.

The objective is to streamline regulations, enhance investor protection, and improve ease of doing business in capital markets. The proposed Code adopts a principle-based approach to simplify compliance and strengthen governance.

Key Objectives of the Securities Markets Code

The Bill aims to consolidate and amend laws governing securities markets to create a unified regulatory structure. It seeks to reinforce the powers and governance framework of the Securities and Exchange Board of India (SEBI), referred to as the “Board” in the legislation.

By simplifying the language of the law and removing redundant provisions, the Code intends to improve clarity and reduce ambiguity for market participants. The overarching goal is to ensure efficiency, transparency, and predictability in India’s capital market ecosystem.

Enforcement And Compliance Framework

The proposed Code introduces a streamlined enforcement mechanism by mandating a single adjudication process for all quasi-judicial actions. It prescribes specific timelines for investigations and issuance of interim orders, ensuring time-bound completion of enforcement proceedings.

To ease compliance, minor criminal and procedural contraventions will be converted into civil penalties. Criminal liability will be restricted to serious offences such as market abuse, non-compliance with quasi-judicial orders, and non-cooperation during investigations.

Governance And Investor Protection Measures

The Bill mandates greater transparency and accountability in regulatory decision-making. Members of the Board will be required to disclose any direct or indirect interests while participating in decisions.

To strengthen investor grievance redressal, the Code provides for the establishment of an Ombudsperson mechanism. Additionally, SEBI will be empowered to set up a regulatory sandbox to encourage innovation in financial products and services under controlled conditions.

Consultation And Subordinate Legislation

The proposed legislation emphasises a transparent and consultative process for issuing subordinate regulations and guidelines. This approach aims to reinforce predictability and reduce compliance uncertainty for market participants.

By adopting a principle-based framework, the Code seeks to balance regulatory oversight with flexibility for innovation. The government expects these measures to enhance confidence among investors and stakeholders in India’s securities markets.

Read More: Lok Sabha Passes Insurance Bill Raising FDI Limit to 100%.

Conclusion

The introduction of the Securities Markets Code Bill, 2025, marks a significant step towards modernising India’s capital market regulations. By merging three existing laws into a unified framework, the Code aims to strengthen SEBI’s powers, improve enforcement efficiency, and enhance investor protection.

The proposed measures, including streamlined adjudication, civil penalties for minor offences, and a regulatory sandbox, reflect a forward-looking approach. The Bill will now undergo parliamentary scrutiny before becoming law.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.