Why in News?
The Finance Minister tabled the Securities Market Code (SMC) Bill, 2025 in the Lok Sabha.
Description:
Core Objective:
- Consolidation: The Bill aims to unify India’s securities market framework by merging three decades-old laws into a single, principle-based code.
- Legislative History: Originally proposed in the Union Budget 2021-22, it has now been referred to the Standing Committee on Finance for review.
- Purpose: To modernise the statutory framework, reduce compliance burdens, improve regulatory governance, and support technology-driven markets.
The “3-to-1” Law Repeal:
The Code seeks to repeal and replace the following Acts:
- Securities Contracts (Regulation) Act, 1956 (SCRA).
- Securities and Exchange Board of India Act, 1992 (SEBI Act).
- Depositories Act, 1996.
SEBI:
Securities and Exchange Board of India (est. 1988; HQ: Mumbai) is the statutory regulatory body for securities and commodity market in India under the ownership of Ministry of Finance.
- Regulatory Authority: Primary market, Secondary Market, Mutual fund, Foreign Institutional Investment
- Background: Initially a non-statutory body without any statutory power. It became autonomous and given statutory powers by SEBI Act 1992
- Aim: To protect the interests of investors in securities and to promote the development of, and regulate the securities market
Institutional Changes: SEBI Board:
| Feature | Current Provision | Proposed under SMC 2025 |
| Total Board Size | 9 Members | Up to 15 Members |
| Composition | Chairperson + 8 members | Chairperson, 2 from Central Govt (Finance/Companies Act), 1 from RBI, and 11 other members. |
| Whole-Time Members | 3 members | At least 5 must be Whole-Time Members. |
| Conflict of Interest | Less explicit | Strict disclosure norms: Mandatory disclosure of direct/indirect interests (including family) and recusal from specific meetings. |
| Post-Tenure Limit | N/A | Members cannot accept employment with the Govt or market participants for one year after leaving office without prior approval. |
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