Securities Markets Code Bill 2025: Expanded SEBI Board To Enhanced Powers — Key Takeaways
The number of SEBI Board members will increase from nine to up to 15, improving governance and decision-making.
The Securities Markets (Code) Bill 2025, which was introduced by Finance Minister Nirmala Sitharaman in the Lok Sabha on Thursday, proposes a complete overhaul of India’s securities regulation.
The proposed legislation consolidates existing laws into a single, principle-based code to simplify the regulatory framework, strengthen the Securities and Exchange Board of India and bolster investor protection and market efficiency, according to sources.
Here are the 10 most significant reforms proposed:
Top 10 Key Facts to Know
Expanded SEBI Board: The number of SEBI Board members will increase from nine to up to 15, improving governance and decision-making.
Conflict of Interest Rules: Members must disclose any direct or indirect interest (including family interests) related to board matters and recuse themselves where conflicts exist.
New Grounds for Removal: A member can be removed if they acquire financial or other interests likely to prejudice their functions.
Enhanced SEBI Powers: SEBI will review its own performance, ensure proportionality of regulations, build employee capacity, and conduct periodic studies. It will also lay down guiding principles for implementing the Code.
Mandatory Public Consultation: SEBI, market infrastructure institutions and the Union government must follow a transparent and consultative rule-making process.
Decriminalization of Securities Laws: The first category of minor violations (fraudulent/unfair practices) attract civil penalties only. The second category of serious "market abuse" violations may attract both civil and criminal liability.
Recognition of MIIs: The bill formally recognises the MIIs (stock exchanges, clearing corporations, depositories) and allows the government to notify new categories.
Regulatory Sandbox: SEBI can establish a sandbox to test innovative financial products, contracts, and services in a controlled environment.
Investor Charter: SEBI will specify principles for investor protection and participation in securities markets.
Ombudsperson for Grievances: SEBI can appoint officers as Ombudspersons for time-bound resolution of investor complaints.
These reforms aim to make India’s securities market more transparent, investor-friendly, and innovation-driven while reducing regulatory complexity.
