FM Nirmala Sitharaman introduces Securities Markets Code Bill, proposes single framework for securities regulation: 7 things to know

The government on Thursday, December 18, tabled the Securities Markets Code Bill, 2025 in the Lok Sabha, setting out plans to bring India’s securities markets under a single, streamlined legal framework. Finance Minister Nirmala Sitharaman said the Bill could be referred to a parliamentary standing committee, signalling that the government is open to wider consultation and detailed scrutiny.

The Bill seeks to fold three long-standing financial laws into one consolidated code - a step the government believes will make regulation simpler, bolster investor safeguards and make it easier for businesses to operate in India’s capital markets. By rolling these statutes into a single code, the proposal seeks to deliver clearer rules, more consistent oversight and a more predictable regulatory environment for India’s capital markets.

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Parliamentary panel referral under consideration

Presiding over the proceedings, Krishna Prasad Tenneti clarified that the Lok Sabha Speaker holds the authority to refer Bills to department-related standing committees. He noted that a decision on the referral would be taken separately.

The government’s willingness to send the Bill for committee review is being seen as an attempt to build broader political consensus on a far-reaching reform of India’s market regulation architecture.

Strengthening SEBI’s governance framework

The proposed Code also looks to strengthen the role and governance structure of the Securities and Exchange Board of India, referred to in the Bill simply as “the Board”.

To improve transparency, the Bill introduces new safeguards that require members of the Securities and Exchange Board of India board to disclose any direct or indirect interests when taking part in regulatory decisions - a step aimed at tightening accountability and reinforcing trust in the regulator’s functioning.

Offering a corporate governance perspective on the proposed Securities Markets Code, Lalit Kumar, Partner at JSA Advocates & Solicitors, described the Bill as a “big-bang reform” on the lines of the upcoming Direct Tax Code. He said the consolidation of three key legislations—the SEBI Act, the Securities Contracts (Regulation) Act and the Depositories Act—would significantly strengthen overall investor protection. However, Kumar noted that from a pure corporate governance standpoint, the Code does not introduce any major new provisions. “Clause 65 of the Bill empowers SEBI to frame regulations, which is already the case under the existing SEBI LODR framework. Corporate governance norms will continue to be driven through SEBI regulations, as is the current practice,” he said.

Changes to enforcement and penalties

The Bill proposes a single, streamlined adjudication process for quasi-judicial actions, along with clear timelines for investigations and interim orders. To reduce the compliance burden, minor procedural lapses and non-fraudulent violations are proposed to be treated as civil offences instead of criminal ones. Criminal action would be reserved for serious misconduct, including market abuse, wilful defiance of regulatory orders and attempts to obstruct investigations.