The Union Finance Minister introduced the Securities Markets Code Bill, 2025 in the Lok Sabha, proposing a comprehensive overhaul of India’s securities laws. 

About the Securities Markets Code (SMC) Bill, 2025

• The SMC Bill, 2025 aims to replace these three major, decades-old securities laws with a single, modern framework.
  • The SEBI Act, 1992
  • The Depositories Act, 1996
  • The Securities Contracts (Regulation) Act, 1956
• This consolidation aims to remove overlapping and redundant provisions, creating a streamlined, principle-based legislative structure. 
• This is the first comprehensive review of securities market legislation, intended to widen investor participation and enhance capital mobilisation.

Key Reforms and Provisions of the Bill

• Strengthening SEBI’s Regulatory Mechanism:
  • Expanded Board: The SEBI Board will be expanded from the current 9 members to up to 15 members, including the Chairperson.
  • Conflict of Interest: Board members must disclose any direct or indirect interests during decision-making.
  • Subordinate Legislation: A more transparent and consultative process for issuing rules and regulations.
• Streamlined Enforcement & Adjudication:
  • Single Process: Introduces a single adjudication process for all quasi-judicial actions.
  • Clear Timelines: Sets timelines for investigations and interim orders to ensure time-bound regulatory action.
  • Separation of Powers: Maintains an arm’s-length separation between investigation and adjudication functions.
• Decriminalisation for Ease of Doing Business:
  • Shift to Civil Penalties: Minor, procedural, and technical violations will be converted into civil penalties.
  • Criminal Provisions Retained: Criminal charges will remain for serious offences like market abuse, non-compliance with orders, and non-cooperation in investigations.
• Enhanced Investor Protection:
  • Grievance Redressal: Establishes a time-bound grievance redressal mechanism and the office of an Ombudsperson to address investor complaints.
  • Education & Awareness: Mandates enhanced investor education and awareness initiatives.
• Encouraging Innovation & Coordination
  • Regulatory Sandbox: Empowers SEBI to set up a Regulatory Sandbox to foster innovation in financial products and services.
  • Inter-Regulatory Coordination: Creates a framework for better coordination among regulators to facilitate seamless listing of various financial instruments.

Securities and Exchange Board of India

• SEBI is the apex regulatory body for India’s securities and commodity derivatives markets.
• Origin: Established in 1988 and given statutory powers via the SEBI Act, 1992. 
• Headquarters: Mumbai, with regional offices in Ahmedabad, Kolkata, Chennai, and Delhi.
• Twin Mandate: Its primary objectives are to protect the interests of investors in securities and to promote the development and regulation of the securities market.
• Triple Roles: It functions with quasi-legislative (makes regulations), quasi-executive (enforces rules), and quasi-judicial (adjudicates disputes and imposes penalties) powers.
• Key Functions:
• • Regulatory: Registers and oversees stock exchanges, brokers, mutual funds, and other intermediaries.
  • Protective: Prohibits insider trading and fraudulent/unfair trade practices to ensure market integrity.
  • Developmental: Promotes investor education and facilitates the introduction of new products and services.

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