The Securities Markets Code 2025 was introduced in Lok Sabha on 18 December 2025, proposing the most comprehensive overhaul of India's securities market regulatory framework since the enactment of the Securities and Exchange Board of India Act in 1992. The bill, which seeks to consolidate three existing statutes into a single code, was referred to the Parliamentary Standing Committee on Finance for detailed examination given its sweeping scope and implications for capital markets.
Background
India's securities market regulation currently operates under a fragmented statutory framework comprising three principal enactments: the Securities and Exchange Board of India Act, 1992 (SEBI Act), the Securities Contracts (Regulation) Act, 1956 (SCRA), and the Depositories Act, 1996. This multi-statute architecture has created overlapping provisions, jurisdictional ambiguities, and interpretive challenges that have complicated enforcement and compliance for market participants.
The consolidation effort had been under consideration for several years. SEBI and the Ministry of Finance had conducted extensive consultations with market intermediaries, exchanges, and legal practitioners. The resulting bill adopts a principles-based approach to regulation rather than the existing prescriptive model, reflecting global trends in securities market governance.
Key Provisions
The Securities Markets Code 2025 proposes the following structural changes:
Statutory consolidation: The bill repeals and replaces the SEBI Act 1992, the SCRA 1956, and the Depositories Act 1996 with a single, comprehensive code governing all aspects of securities market regulation, intermediary registration, exchange operations, and depository functions.
Principled regulation-making: The Code shifts from a prescriptive rule-making model to a principles-based framework, granting SEBI greater flexibility to issue regulations that adapt to evolving market conditions while maintaining overarching statutory principles.
Decriminalisation of offences: Certain technical and procedural violations that currently attract criminal prosecution are proposed to be decriminalised and subjected instead to civil monetary penalties, reducing the compliance burden on market participants while maintaining deterrence for serious misconduct.
Enhanced enforcement architecture: The Code strengthens SEBI's investigative and adjudicatory powers, including provisions for expedited disposal of enforcement proceedings and enhanced penalty structures for market manipulation and insider trading.
Standing Committee referral: Given the bill's transformative scope, Parliament referred it to the Standing Committee on Finance, signalling that it would not be fast-tracked and would undergo rigorous multi-stakeholder scrutiny.
Implications for Practitioners
The referral to the Standing Committee provides a window for capital markets practitioners to engage meaningfully with the legislative process. Law firms, stock exchanges, and market intermediaries should prepare detailed submissions addressing specific provisions, particularly the shift to principles-based regulation which will fundamentally alter how compliance teams operate.
Securities lawyers should closely study the decriminalisation provisions, which will reclassify the risk profile of several regulatory violations from criminal exposure to civil liability. This has direct implications for how market intermediaries structure their compliance programmes and respond to SEBI investigations.
The transition from three statutes to one code will necessitate a comprehensive review of existing contractual frameworks, compliance manuals, and dispute resolution mechanisms that reference the outgoing legislation.