The Securities Market Code 2025 aims to simplify and transparent the Indian capital market. It focuses on strengthening investor protection, clarifying regulations and reforming the structure of SEBI by integrating three old laws.
Securities Market Code 2025: Securities Market Code Bill 2025 i.e. Securities Market Code 2025 is being considered a big step towards making the Indian capital market simpler, integrated and more transparent. The government has recently introduced this bill and it has currently been sent to the Parliamentary Standing Committee on Finance for review. The Code aims to bring decades-old and disparate laws into one framework to make it easier for investors, market intermediaries and regulators to understand and implement the rules.
Three old laws will be integrated
SMC 2025 will replace three important laws. These include the Securities Contracts Regulation Act 1956, SEBI Act 1992 and the Depositories Act 1996. Till now these three laws governed different aspects. The first regulated stock exchange and trading.
The second gave powers to SEBI as a market regulator. The third was related to the maintenance and transfer of securities in demat i.e. electronic form. Through the new bill, an attempt has been made to bring all these under a single legal framework.
Changes in the role and structure of SEBI
In the new bill, a major change is proposed in the structure of SEBI i.e. Securities and Exchange Board of India. At present the board of SEBI consists of nine members. Under SMC 2025, it is proposed to increase it to 15 members. It will include six independent and part-time members. It is believed that this will bring external expertise and diverse perspective in SEBI’s decisions. This step has been taken with the intention of improving the quality of the regulator.
Strict provisions on conflict of interest
An important aspect of SMC 2025 is regarding conflict of interest for SEBI members. This definition has been made broader in the new bill as compared to the existing laws. Now, not only the direct or indirect interests of a SEBI member but also the interests of his family members will be included in it. The Central Government has been given the power to remove a member if his interests can influence his official decisions. Through this, an attempt has been made to increase the impartiality and credibility of SEBI.
Changes in investigation and decision process
Under the Bill, the appointment of Inquiry Officer and Adjudicating Officer has been limited. Now only full-time members of SEBI or officers of SEBI can be appointed to these posts. Earlier any person could have been given this responsibility. However, an important condition has also been added that the same officer who is investigating cannot give the final decision in that case. An attempt has been made to ensure institutional fairness through this.
Time limit set for violations
SMC 2025 has brought another major change. Now investigation into any alleged violation will have to be initiated within eight years from the date of the violation. Till now there was no such time limit due to which old cases remained pending for years. However, this limit will not apply to cases which have system-wide impact on the market or which are referred by any investigating agency. This is expected to provide clarity to both investors and companies.
New perspective on punishment and punishment
An attempt has also been made to balance the penal provisions in the bill. Now there is a provision for only monetary penalty for some violations. Whereas in serious cases the jail sentence has been retained. These include crimes like insider trading, defrauding investors, trading based on non-public information and manipulating market prices. The special thing is that a proposal has also been made to bring market abuse under the ambit of Prevention of Money Laundering Act. This may give the Enforcement Directorate the right to investigate.
Special focus on investor protection
Investor protection has been kept at the center of SMC 2025. The Bill directs SEBI to set up an investor grievance redressal mechanism. Besides, service providers will also have to create grievance redressal systems at their own level. Apart from this, SEBI has been given the right to appoint an ombudsman, who will be able to hear the complaints of investors. Along with this, there is also a provision for making an Investor Charter, through which investors will get information about their rights and responsibilities.
Formal recognition of market infrastructure institutions
The concept of Market Infrastructure Institutions i.e. MIIs has been formally recognized in the Bill. It includes stock exchanges, clearing corporations and depositories. Apart from this, the Central Government will also have the right to notify new categories. MIIs are permitted to frame their own bye-laws to ensure non-discriminatory access to services and prevent market abuse.
Concern over SEBI’s increasing powers
Although many positive aspects have emerged regarding this bill, some experts have also expressed concerns. He believes that from SMC 2025, SEBI may have excessive powers concentrated. In such a situation, it is important to clearly define checks and balances so that the regulator remains accountable. The purpose of the law is to strengthen markets, not excessive centralization of power.
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