How proposed Securities Markets Code, 2025 seeks to strengthen SEBI power, Pg15

Key Highlights:

• The Securities Markets Code (SMC), 2025 was introduced in Parliament to overhaul Indian securities market regulations.
• The Bill aims to strengthen investor protection, ease compliance, improve regulatory governance, and promote ease of doing business.
• SMC, 2025 seeks to replace and merge the Securities Contracts (Regulation) Act, 1956 (SCRA), the SEBI Act, 1992, and the Depositories Act, 1996.
• The Bill empowers the government to remove SEBI Board members under specific conditions and proposes increasing the number of members from 9 to 15.
• SMC categorizes contraventions into violations of fraudulent practices (civil penalties) and market abuse (civil penalties and potential offenses).
• SEBI will specify an investor charter and grievance redressal mechanisms, including designating an Ombudsperson.

Detailed Insights:

• The Securities Markets Code (SMC) Bill, 2025 consolidates three existing laws to address overlapping provisions and adapt to technological advancements and market complexity.
• The bill empowers the government to remove a SEBI Board member if they acquire any financial interest that is likely to prejudice their official functions.
• The Code seeks to eliminate conflict of interest by requiring the Members of the Board to disclose any direct or indirect’ interest while participating in decision-making.
• The bill proposes to increase the number of SEBI board members from the current 9 to 15, enhancing regulatory oversight.
• Decriminalizing violations of fraudulent practices aims to reduce compliance burdens while maintaining deterrence for serious misconduct like market abuse.
• The investor charter and Ombudsperson mechanism will enhance investor protection and provide effective grievance redressal.
• The SMC proposes a consolidated framework for the registration of intermediaries and pooled investment vehicles, streamlining regulatory processes.
• The Bill empowers SEBI to delegate parts of its registration functions to Market Infrastructure Institutions (MIIs) and Self-Regulatory Organizations (SROs) to facilitate more effective regulation.
• The Bill provides an enabling framework for inter-regulatory coordination, wherein SEBI in consultation with other regulatory authority, may make regulations to enable a seamless process for listing of other regulated instruments.

Key Concepts Involved:

• Securities Markets Code (SMC): A consolidated legal framework governing Indian securities markets.
• Market Abuse: Grave violations affecting market integrity and public interest, attracting civil penalties and potential offenses.
• Investor Charter: A document specifying the rights and responsibilities of investors in the securities market.
• Market Infrastructure Institutions (MIIs): Institutions like stock exchanges and clearing corporations that facilitate trading and settlement.