Securities Markets Code Bill 2025: One Law, Many Questions

SEBI’s Expanding Powers and the Accountability Debate

The introduction of the Securities Markets Code Bill, 2025 marks one of the most far-reaching reforms of India’s capital market framework in decades. By consolidating multiple laws into a single code, the government aims to modernise regulation for fast-evolving, technology-driven financial markets. At the same time, the Bill has reignited concerns over regulatory power and accountability.

What the Bill Proposes

Tabled in the Lok Sabha by Finance Minister Nirmala Sitharaman , the Bill seeks to merge three key statutes — the Securities Contracts (Regulation) Act, 1956 , the SEBI Act, 1992 , and the Depositories Act, 1996 — into one principle-based Securities Markets Code. The objective is to remove overlaps, reduce compliance complexity, and align the law with electronic trading, new financial products, and modern market infrastructure. The Bill has been referred to the Parliamentary Standing Committee on Finance for scrutiny.

Expansion of SEBI’s Role

A central feature of the reform is the strengthening of the Securities and Exchange Board of India (SEBI) . The Bill expands SEBI’s board from nine to 15 members, increases whole-time representation, and includes nominees from the Union government and the RBI. It also tightens conflict-of-interest disclosures, including those of family members. Minor violations are decriminalised through civil penalties, while serious fraud and market abuse remain criminal offences. Time limits for investigations and interim orders aim to improve enforcement efficiency.

Investor Protection Provisions

The Code gives statutory backing to investor protection by incorporating an Investor Charter , mandating standardised grievance redressal systems, and restoring the SEBI Ombudsperson , which was discontinued in 2023. This shift moves investor safeguards from regulatory discretion to a rule-based framework.

Concerns Over Accountability

Critics argue that while SEBI’s powers are enhanced, oversight mechanisms remain limited. The absence of a prior white paper or public consultation has added to unease, particularly among opposition leaders and market participants. Questions also persist about whether SEBI has adequate institutional capacity and expertise to exercise its expanded mandate effectively.

What to Note for Exams

• Securities Markets Code Bill, 2025 merges three major capital market laws

• SEBI’s board strength is increased from 9 to 15 members

• Minor offences are decriminalised; serious violations remain criminal

• Investor Charter and SEBI Ombudsperson gain statutory backing

The standing committee’s review will be crucial in determining whether the final law balances regulatory strength with transparency and accountability, shaping India’s capital market governance for years to come.