Securities Markets Code (SMC) Bill - More Regulatory powers to SEBI

The Securities Markets Code (SMC) Bill, 2025, marks a historic shift in India’s financial landscape by unifying decades of scattered regulations. The Bill seeks to improve regulatory transparency and simplify compliance for businesses by 

a.   Replacing and merging SEBI Act, 1992, Securities Contracts (Regulation) Act, 1956 and Depositories Act, 1996

b.   Expansion of Sebi governance by raising its number of members with more transparency guidelines

c.    Decriminalizing minor violations to civil penalties and criminal prosecution for serious market abuse and major frauds

d.   Better investor protection through a dedicated ombudsman, recovering illegal gains and paying back to investors affected and introduction of 180 day time limit for completion of investigations

e.   The new law gives SEBI the power to oversee and protect investors in modern types of investments which were in a "grey area"—there were no clear rules, which made them risky for regular people.

f.      There is a dedicated look back period of 8 years meaning SEBI will not be permitted to investigate violations that occurred more than 8 years ago, except those having high market impact. 

Our view: 

This was a bill long time in the offing. It merges three distinct act under one Bill to make the rule making for securities markets more transparent. The most important aspect is decriminalising most transgressions, a vital necessity for encouraging investors into the market. India still has too many provisions in various laws for handing down harsh penalties like jail terms. Those only raise costs as offenders instead of coming clean are encouraged to evade the law. So the Securities Market Code Bill, moving away from there, is a welcome development. 

A related development by Sebi is the recent launch of Dharohar https://mism.org/?utm_source=Netcore&utm_campaign=TFK+-+Dec+25_campaign+2&utm_medium=Email&utm_term=Campaign which tracks milestones in the Indian Securities market. It is a treasure trove for scholars and students in the sector to explore as a virtual museum. JGU having launched India's first and only Constitution Museum welcomes such initiatives. 

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Link : https://legal.economictimes.indiatimes.com/news/law-policy/indias-major-overhaul-of-securities-regulation-the-securities-markets-code-bill-2025/126116516