Securities Markets Code Bill Introduced In Lok Sabha To Strengthen SEBI, Enhance Investor Protection

New Delhi, Dec 19 (KNN) Finance Minister Nirmala Sitharaman on Thursday introduced the Securities Markets Code (SMC) Bill in the Lok Sabha, aiming to strengthen the powers of market regulator Securities and Exchange Board of India (SEBI), decriminalise several market violations and enhance investor protection.

The proposed legislation seeks to consolidate three existing laws, the Securities Contracts (Regulation) Act, 1956, the SEBI Act, 1992, and the Depositories Act, 1996, into a single, comprehensive securities market code, as announced in the Union Budget.

Key Provisions of the Bill

One of the major proposals under the SMC Bill is the expansion of the SEBI board from the existing nine members to 15 members. The bill also seeks to eliminate conflicts of interest within the SEBI board and introduce global best practices in regulatory governance, accountability and transparency.

The bill sets time-bound timelines for SEBI investigations and enforcement, requiring probes to begin within eight years of a securities law violation and mandating defined timelines for interim and enforcement actions.

Decriminalisation and Reduced Compliance Burden

The SMC Bill proposes limiting criminal liability to serious offences such as market abuse, non-cooperation with SEBI investigations and non-compliance with SEBI orders. Minor violations will be decriminalised and addressed through civil action by the regulator.

The legislation is also aimed at reducing the compliance burden for listed companies and other market stakeholders, making securities laws more aligned with current market practices and removing obsolete provisions.

Investor Protection and Education

The bill mandates adherence to an investor charter, brings investor education under a statutory framework, and ensures time-bound grievance redressal to strengthen investor protection.

The proposed code tasks SEBI with promoting training for intermediaries and market participants and grants statutory status to National Institute of Securities Markets (NISM) to conduct training, certification and research.

The Bill mandates public consultation for all binding instruments issued by SEBI, including regulations, subsidiary instructions and by-laws issued by Market Infrastructure Institutions (MIIs). The government will also undertake public consultations while framing rules under the code.

(KNN Bureau)