India's Securities Market Set for Major Overhaul: What the New Code Means for Investors and Businesses

The Indian government has taken a significant step towards reforming the country's securities market by introducing the Securities Markets Code Bill, 2025. This move aims to simplify and strengthen the regulatory framework, making it easier for businesses to operate and for investors to participate in the market.

Streamlining Regulations

The proposed code seeks to consolidate and replace three existing statutes: the SEBI Act, 1992, the Depositories Act, 1996, and the Securities Contracts (Regulation) Act, 1956. This will bring together laws governing the securities markets, bolstering regulatory oversight, and strengthening investor safeguards.

Key Features of the New Code

• Sharper Focus on SEBI: The code places a greater emphasis on the role and functioning of the Securities and Exchange Board of India (SEBI), referred to as the "Board".
• Simplified Language: The code simplifies statutory language by removing overlapping provisions and outdated concepts to enhance regulatory clarity.
• Streamlined Enforcement: The code proposes a more streamlined enforcement architecture, with all quasi-judicial proceedings to be routed through a single adjudication mechanism.
• Faster Enforcement: The code prescribes defined timelines for completing investigations and issuing interim directions, emphasizing faster and time-bound enforcement.

Benefits for Investors and Businesses

The new code aims to reduce the compliance burden on market participants by reclassifying minor procedural and technical violations as civil defaults, attracting monetary penalties instead of criminal prosecution. Additionally, the code introduces an Ombudsperson mechanism to strengthen grievance redressal and provides for a more structured and consultative approach for framing subordinate legislation.

Increased Transparency and Accountability

Members of the Board will be required to disclose any direct or indirect interests when participating in decisions, improving transparency and accountability. This move is expected to enhance investor confidence and promote a more stable and efficient securities market.

Remember, this is a proposed legislation, and its impact will depend on its implementation and the responses of market participants. As with any significant change, it's essential to stay informed and adapt to the new regulatory environment.