New Securities Markets Code Bill Set to Overhaul India's Financial Regulations

The Indian government is preparing to introduce the 2025 Securities Markets Code Bill, which will replace three existing laws governing securities markets. This new legislation aims to modernize regulations, enhance investor protection, and streamline compliance. However, it has raised concerns among opposition parties regarding potential dilution of SEBI's autonomy and the impact on small investors. Key provisions include mandatory disclosures by SEBI members, restrictions on post-office employment, and stringent penalties for market abuse. As the bill approaches its introduction in Parliament, its implications for the financial landscape are under scrutiny.

By Narendra Chaudhary Dec 18, 2025, 11:21 IST

Introduction of the 2025 Securities Markets Code Bill

The Indian government is preparing to unveil the 2025 Securities Markets Code Bill, which aims to replace three existing laws governing the securities markets.

This new legislation will supersede the 1992 Securities and Exchange Board of India Act, the 1956 Securities Contracts Regulation Act, and the 1996 Depositories Act.

It is anticipated that the bill will be presented during the Winter Session of Parliament, which concludes on Friday.

As per the Union government, this new law aims to streamline and unify current regulations while establishing a contemporary framework for investor protection and capital mobilization, aligning with the rapid growth of the Indian economy.

Key Provisions of the Proposed Legislation

The bill mandates that members of the Securities and Exchange Board of India (SEBI) disclose all their direct and indirect interests when involved in decision-making processes.

This move follows allegations made in August 2024 against Madhabi Puri Buch, the then-chairperson of SEBI, regarding undisclosed interests in offshore entities linked to stock price manipulation and money laundering involving the Adani Group. Both Madhabi and her husband, Dhaval Buch, have denied these claims.

Furthermore, the proposed law will prevent the chairperson and board members from accepting any government employment for one year after leaving their positions, unless they receive prior approval from the Union government.

They will also be barred from taking up roles with securities market service providers or market participants for a year.

Additionally, the law stipulates that investigations or inspections for any violations of the code cannot occur after eight years from the date of the infraction, although the board can still initiate probes in cases referred by investigating agencies or if systemic impacts are suspected.

Regulations Against Market Abuse

The legislation includes strict provisions against market abuse, prohibiting board members from engaging in insider trading or employing deceptive practices to defraud investors.

It also forbids individuals from trading securities while possessing material or non-public information and from disseminating such information in violation of the code.

Publishing false or misleading information about securities with the intent to manipulate prices is also prohibited under the new law.

Violators of these provisions could face a maximum prison sentence of 10 years.

Moreover, the bill aims to categorize 'market abuse' as an offense under the Prevention of Money Laundering Act, allowing the Enforcement Directorate to pursue investigations against those accused of such activities.

Concerns Raised by the Opposition

Opposition's Viewpoint on the Bill

The Congress party has expressed apprehensions regarding the proposed legislation.

Syed Naseer Hussain, a Rajya Sabha MP from Congress, stated that the bill could undermine SEBI's regulatory independence, thereby diminishing its capacity to safeguard investors from fraud and market manipulation due to fragmented oversight.

He further noted that the bill may ease compliance requirements, potentially benefiting large corporations and institutional investors while putting small and retail investors at a disadvantage due to their limited resources to adapt to the new regulations.