Context:
- Union Finance Minister Nirmala Sitharaman tabled the Securities Market Code Bill, 2025 in the Lok Sabha.
- The Bill seeks to unify and modernise India’s securities market laws by consolidating multiple legislations into a single code.
- It has been referred to the Standing Committee on Finance for detailed examination.
Key Highlights:
Legislative / Policy Details:
- The Bill proposes to consolidate:
- Securities Contracts (Regulation) Act, 1956
- Securities and Exchange Board of India (SEBI) Act, 1992
- Depositories Act, 1996
- Objective is to create a modern regulatory framework to support capital mobilisation at scale and improve ease of doing business.
Structural Changes Proposed:
- SEBI Board Expansion:
- Increase in total number of members.
- Inclusion of Chairperson, two whole-time members, two officers of the Central Government, one RBI ex-officio member, and 11 others, with at least five whole-time members.
- Aim to improve specialisation, oversight, and adjudication capacity.
Compliance and Enforcement Reforms:
- Introduction of civil penalties for offences such as:
- Unlawful gains or losses
- Market manipulation
- Insider trading
- Non-public information misuse
- Decriminalisation of minor procedural violations to reduce compliance burden.
- Provision for time-bound compounding of offences in certain cases.
Significance:
- Aligns India’s securities regulation with global best practices.
- Balances market integrity with business facilitation.
- Reflects a shift from criminalisation to civil and administrative enforcement.
Relevant Prelims Points:
- Issue: Fragmented securities laws causing regulatory overlaps.
- Government Initiative:
- Securities Market Code Bill, 2025
- Regulator:
- SEBI – statutory body regulating capital markets.
- Benefits:
- Legal clarity
- Faster dispute resolution
- Reduced compliance costs
- Challenges:
- Ensuring regulatory independence
- Avoiding dilution of investor protection
Relevant Mains Points:
- Facts & Provisions:
- Consolidation of three core securities laws into one code.
- Keywords & Concepts:
- Capital market reforms, regulatory governance, ease of doing business, investor protection.
- Analysis:
- A unified code can enhance predictability and transparency in capital markets.
- However, effectiveness depends on implementation capacity and regulatory autonomy.
- Way Forward:
- Strengthen SEBI’s adjudicatory infrastructure.
- Ensure parliamentary oversight through Standing Committees.
- Periodic review of enforcement outcomes.
UPSC Relevance (GS-wise):
- GS Paper II: Parliament, regulatory institutions, governance.
- GS Paper III: Indian economy, capital markets, financial sector reforms.