Govt. Introduces the Securities Markets Code, 2025 in Lok Sabha

Bill No. 200 of 2025; Dated: 18.12.2025

1. Legislative Overview

The Government of India has introduced the Securities Markets Code, 2025 in the Lok Sabha, marking a major step towards consolidation and modernisation of India’s securities market laws.

The proposed Code seeks to replace and subsume three existing statutes into a single, comprehensive legislative framework:

• SEBI Act, 1992
• Securities Contracts (Regulation) Act, 1956
• Depositories Act, 1996

This consolidation is intended to simplify the legal architecture governing securities markets and remove overlaps, inconsistencies, and legacy provisions.

2. Objectives of the Securities Markets Code

The Code aims to:

• Rationalise and consolidate dispersed provisions across multiple statutes
• Provide a modern, technology-aligned regulatory framework
• Strengthen investor protection mechanisms
• Facilitate efficient capital mobilisation for economic growth
• Align securities regulation with the needs of a fast-growing Indian economy

The overarching vision is to support India’s financial self-reliance by enabling domestic capital markets to fund productive investment more effectively.

3. Impact on Financial Markets and Economy

The Code is expected to:

• Deepen and broaden capital markets
• Improve regulatory certainty and predictability
• Encourage domestic and foreign investment
• Enhance India’s position as a global financial and investment destination
• Support long-term infrastructure and enterprise funding through robust securities markets

4. Governance and Conflict of Interest Safeguards

To strengthen regulatory governance, the Code introduces explicit conflict-of-interest controls:

• Members of the Board are required to disclose any direct or indirect interest
• Such disclosures are mandatory before participating in decision-making
• This ensures objectivity, transparency, and integrity in regulatory actions

These provisions are designed to reinforce trust in the regulatory process.

5. Streamlined Adjudication Framework

The Code simplifies enforcement and adjudication by:

• Streamlining adjudication procedures
• Ensuring that all quasi-judicial actions follow a single, unified adjudication process
• Mandating an appropriate fact-finding exercise before adjudication

This reduces fragmentation, procedural delays, and duplicative proceedings under different laws.

6. Introduction of an Ombudsperson for Investor Grievances

A key investor-centric reform under the Code is the introduction of an Ombudsperson mechanism:

• Serves as a comprehensive platform for redressal of unresolved investor grievances
• Provides speedy, accessible, and effective dispute resolution
• Strengthens confidence of retail investors in the securities market ecosystem

This mechanism aims to make grievance redressal simpler, faster, and more responsive.

7. Decriminalisation of Minor Contraventions

To promote ease of doing business, the Code proposes:

• Decriminalisation of minor, procedural, and technical contraventions
• Replacement of criminal liability with civil penalties in appropriate cases

This reduces compliance burden, litigation risk, and fear of criminal prosecution for routine or technical lapses, while retaining deterrence for serious violations.

8. Regulatory Intent and Significance

The Securities Markets Code, 2025 seeks to:

• Modernise securities regulation in line with global best practices
• Reduce regulatory complexity and compliance friction
• Enhance investor confidence and market integrity
• Enable faster dispute resolution and enforcement
• Support sustainable growth of India’s financial sector

9. Next Steps

The Bill will be taken up for Parliamentary scrutiny, debate, and possible amendment. Once enacted and notified, it will replace the existing three laws, ushering in a single, unified securities law regime in India.

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