NEW DELHI: The Central government will press for passage of the new Securities Market Code, currently being reviewed by the Parliamentary Standing Committee on Finance, in the monsoon session of Parliament, aiming for a new regulatory architecture for the capital markets, two people informed about discussions in the government said.
The standing committee led by Bhartruhari Mahtab, which is expected to table its report early in the monsoon session, has held discussions on the code with industry bodies and experts and is scheduled to discuss it clause by clause with the finance ministry on 12 June before finalizing its report, according to information available from the committee.
Parliament is expected to convene for the monsoon session in the July-August period.
Besides the , the government will take up proposals to be finalized by two informal ministerial groups led by home minister Amit Shah and defence minister Rajnath Singh as part of its next set of reform measures, one person said on condition of anonymity.
Reforming the regulatory architecture for the , including decriminalizing procedural breaches and cutting red tape, is a priority for the Modi administration to make the economy more appealing to investors at a time external shocks have cast clouds over this year’s economic growth projection of 7-7.4%.
The finance ministry said in its monthly economic review for May that navigating FY27 will require agility across monetary, fiscal and structural dimensions to safeguard the growth momentum and keep inflation durably anchored even as the global environment remains uncertain.
Securities Market Code
The code will replace three laws—the Securities Contracts (Regulation) Act, a seven-decade-old law, the Securities and Exchange Board of India Act, a more than three-decade-old law, and the Depositories Act, another three-decade-old law. It proposes a principle-based rather than a highly prescriptive regulatory framework to reduce the compliance burden and to improve regulatory governance.
Chintan Hefa, executive director, IPO advisory and capital markets at Grant Thornton Bharat, said that to a large extent, the code will meet the requirements of the corporate sector and of investors.
It is designed to modernize and align the regulatory framework with current market realities and consolidating the three existing laws into a single framework will improve clarity and reduce fragmentation, said Hefa. The code explicitly aims to support capital mobilization, investor protection and market development and introduces investor-focused provisions such as an investor charter and an ombudsperson, said Hefa.
“Overall, for companies, the code will help with clearer regulatory structure and reduced overlap and for investors, improved grievance mechanisms and accountability. However, effectiveness will depend on the quality of subordinate regulations and consistency in implementation across Sebi (Securities and Exchange Board of India) and intermediaries,” added Hefa.
Dharmesh Jadav, partner – internal audit and risk advisory at Nangia Global, a professional services firm, said that key reforms in the code such as expanded definitions, revamped investor protection, elevated role of market infrastructure institutions (MIIs) and treatment to minor offences aim to elevate governance.
Statute of limitation
Companies will benefit from simplified, clear compliance and ease of business through decriminalization of minor issues and a statute of limitation, while investors benefit from streamlined grievance redressal, enhanced transparency with MIIs and stronger leadership accountability, said Jadav.
The Code prescribes that cannot order investigations after eight years of a violation unless it has been referred to by another agency or the board believes it has had or could have systemic impact on the market.
“The code’s architecture is sound. Its execution will be everything. The Standing Committee on Finance has an opportunity to address the gaps in the proposed code before it is enacted,” added Jadav.
Queries emailed to the ministry of finance, the Parliamentary Standing Committee on Finance and the Prime Minister’s Office on Friday seeking comments on the matter remained unanswered at the time of publishing.