Finance Minister Nirmala Sitharaman on Thursday tabled the Securities Market Code Bill 2025 in the Lok Sabha.
The Bill, which seeks to unify three laws governing securities market, was referred to the Standing Committee on Finance for review.
The Bill proposes to consolidate the Securities Contracts (Regulation) Act, 1956, Securities and Exchange Board of India (SEBI) Act, 1992, and the Depositories Act, 1996.
The move was announced in the Union Budget in 2021-22 and the Bill has now been tabled to rationalise and consolidate the existing provisions, and provides a modern regulatory framework for investor protection and capital mobilisation at a scale, according to the statement of objectives in the Bill.
As per the Bill, the government proposes to increase the number of members in SEBI to 15 from the current nine, including the Chairperson. This will include the Chairperson, two officers appointed by the Central Government and one from the RBI as ex-officio members, and 11 others, of whom at least five will be whole-time members. Currently there are three whole-time members.
In another significant change, Union Government also proposed to decriminalise violations of “minor, procedural and technical nature” into civil penalties to “facilitate the ease of doing business and to reduce the compliance burden.”
The Bill, if enacted the way in its current form, would bring “unlawful gains or losses” under civil penalties and limit punishments only to cases such as insider trading or trading while in possession of material or non-public information.
Further, in the case of contravention of any rules or provisions of the code, no inspection can be done if eight years had passed from the date of contravention.
The Bill also mandates that the members of the board disclose any direct or indirect interests before making a decision to eliminate conflict of interest.
“These changes appear to be made in keeping with extant requirements balancing faster adjudication processes with need for better deterrence,” said Paras Parekh, Partner at CMS INDUSLAW.
Even as the Bill was being introduced, DMK MP Arun Nehru and Congress’ Manish Tewari said it gave excessive powers to a single body, which was against the principle of the separation of powers.
Responding to this, Ms. Sitharaman said that since the government was referring it to the standing committee, such details could be discussed by the panel.
Krishna Prasad Tenneti, who was chairing the proceedings, said the Speaker had the powers to refer bills to Parliamentary panels and he would take a call on the issue.
The Bill aims to strengthen investor protection and improve the ease of doing business in the country’s financial markets.
According to the Statement of Objects and Reasons of the Bill, it endeavours to build a principle-based legislative framework to reduce the compliance burden, improve regulatory governance, and enhance the dynamism of technology-driven securities markets.
The language of the code has been simplified to remove obsolete and redundant concepts, to eliminate duplication of provisions, to incorporate consistent regulatory procedures for standard processes, and to ensure a uniform and streamlined framework of Securities Laws.
Published – December 18, 2025 09:11 pm IST
