Securities Market Code Bill introduced in LS, govt proposes Parliamentary scrutiny

The Union government on Thursday introduced the Securities Market Code Bill, 2025 in the Lok Sabha , proposing that it be sent to the department related standing committee on finance for detailed scrutiny, even as opposition members raised concerns over the concentration of regulatory powers.

Introducing the Bill, Finance Minister Nirmala Sitharaman said the proposed legislation seeks to bring India’s securities laws under a single, modern framework by merging multiple existing laws. The Bill aims to consolidate the Securities and Exchange Board of India Act, 1992 (which regulates capital markets and protects investors), the Depositories Act, 1996 (which governs electronic holding of securities), and the Securities Contracts Regulation Act, 1956 (which regulates trading of securities on stock exchanges) into one comprehensive Securities Market Code . By merging these Acts, the new Code will provide a unified legal and regulatory framework, reducing duplication, simplifying compliance, and creating a single authority for overseeing all securities market activities, making the system more streamlined and easier to navigate for investors, intermediaries, and regulators. The move follows an announcement made in the Union Budget 2021–22 , which proposed rationalising securities legislation to reflect changes in technology and market practices.

How the merger will work in practice:

Currently, investors and intermediaries have to follow different rules under separate laws. For example, if an investor buys shares that are held electronically and a dispute arises:

• Under the SEBI Act , SEBI handles investor protection.

• Under the Depositories Act , the depository verifies electronic records.

• Under the Securities Contracts Regulation Act , exchange rules apply.

Currently, separate laws can create delays and confusion. The Securities Market Code will merge them into a single law, allowing investors to approach an Ombudsperson directly for grievances and giving regulators a streamlined framework, simplifying compliance and strengthening investor protection.

Opposition members Arun Nehru ( DMK ) and Manish Tewari ( Congress ) opposed the Bill, arguing it vests excessive powers in a single authority, reduces accountability, and weakens checks and balances. Finance Minister Nirmala Sitharaman said these concerns could be examined by the department related standing committee, while Krishna Prasad Tenneti noted the Lok Sabha Speaker will decide on the referral.

The Bill introduces a principle-based framework to reduce compliance burden, remove outdated provisions, and standardise procedures. It promotes technology-driven markets, allows a Regulatory Sandbox for innovation, ensures consultative processes, periodic review of regulations, disclosure of conflicts of interest, and streamlines adjudication. Surplus funds from the Board’s reserve are to be transferred to the Consolidated Fund of India.

The standing committee will assess regulatory powers, safeguards, and investor protection before the Bill is finalised.