The Central government on 18th December introduced the Securities Markets Code, 2025 in the Lok Sabha, proposing a single, consolidated law to govern India’s securities markets. The proposed bill repeals the Securities Contracts (Regulation) Act, 1956, the Securities and Exchange Board of India Act, 1992, and the Depositories Act, 1996. The Bill seeks to modernise regulation in line with evolving market practices, technological advancements, and the growing scale of capital markets.

What Does It Mean

The proposed Bill not only modernises the regulation of capital markets in line with evolving market practices, but also strengthens the powers and accountability of the securities regulator. It introduces transparent rule-making, mandates periodic regulatory review, and streamlines inspection, investigation, and adjudication through a unified, time-bound enforcement framework. To eliminate conflicts of interest, the proposed legislation requires members of the SEBI Board to disclose any direct or indirect interests while participating in decision-making, and increases the Board’s strength from nine to fifteen members.

The Code further fosters ease of compliance by decriminalising certain minor contraventions and converting them into civil penalties. It introduces safeguards that were absent in earlier laws by providing statutory timelines, procedural certainty, and a clearer separation of investigative and adjudicatory functions. In a particularly significant move, the Bill bars SEBI from ordering any inspection or investigation after eight years from the date of the alleged contravention—an outer limit that does not exist under the current legal framework. It also establishes an independent Ombudsperson as a redressal mechanism for unresolved investor grievances.

Additionally, the Bill seeks to make India more self-reliant in mobilising capital for businesses and development. For a market that has long operated under a maze of overlapping and fragmented provisions, this unification of securities laws represents a decisive shift in how India’s securities regulator is structured and functions. 

At the same time, the proposed reforms have raised certain policy concerns. These include the potential over-centralisation of power in a single regulator and apprehensions that the decriminalisation of minor violations may weaken deterrence against compliance lapses if civil penalties are not sufficiently stringent or consistently enforced.