The Securities Markets Code (SMC), 2025
The Securities Markets Code (SMC), 2025, introduced in the Indian Parliament, aims to overhaul the existing securities market regulations to enhance investor protection, streamline compliance, and improve regulatory governance.
Key Objectives
- Strengthening investor protection.
- Easing the compliance burden.
- Improving regulatory governance.
- Promoting ease of doing business in India.
Major Proposals
- Consolidation of three existing laws: Securities Contracts (Regulation) Act, 1956 (SCRA), Securities and Exchange Board of India Act, 1992 (SEBI Act), and the Depositories Act, 1996.
- Reduction of overlapping provisions and legal conflicts.
- Increase in SEBI board members from 9 to 15 for enhanced governance.
- Two categories of contraventions:
- Violations with civil penalties, not involving criminal liability.
- Market abuse with potential criminal liability for serious offences.
- Mandate of an investor charter for investor protection and grievance redressal.
Empowerment and Regulation
- Increased power for SEBI to remove board members for conflicts of interest or moral turpitude.
- Designation of SEBI officers as Ombudspersons to handle investor grievances promptly.
- Establishment of a consolidated framework for registration of intermediaries and pooled investment vehicles.
International Best Practices
- Incorporation of global best practices in regulatory governance and transparency.
- Introduction of a regulatory impact assessment to balance enforcement and innovation in the securities market.
Concluding Thoughts
The SMC is designed to create a comprehensive regulatory environment that reduces complexity, enhances coordination among market institutions, and fosters a more inclusive and transparent regulatory framework. This legislative shift is a step towards modernizing India's securities market infrastructure and regulatory practices.
