The proposed Code seeks to consolidate and amend laws relating to the securities markets with the objective of strengthening the regulatory architecture, improving investor protection, and enhancing the efficiency and ease of doing business in capital markets.According to the Bill, the Code aims to reinforce the powers and governance framework of the Securities and Exchange Board of India (SEBI), referred to as the “Board”, while adopting a principle-based legislative approach.
The language of the law has been simplified to remove redundant concepts and improve regulatory clarity.
Regulatory governance and enforcement reformsThe Bill envisages a streamlined enforcement mechanism by ensuring that all quasi-judicial actions are conducted through a single adjudication process. It also lays down specific timelines for investigations and the issuance of interim orders, with an emphasis on time-bound completion of enforcement proceedings.
To ease compliance, the Code proposes converting minor criminal and procedural contraventions into civil penalties. Criminal liability has been limited to serious offences such as market abuse, non-compliance with quasi-judicial orders, and non-cooperation during investigations.
The Bill also mandates greater transparency and accountability in decision-making by requiring members of the Board to disclose any direct or indirect interests while participating in regulatory decisions.
Investor protection and market development
To strengthen investor grievance redressal, the Code provides for the establishment of an Ombudsperson mechanism. It also empowers the Board to set up a regulatory sandbox to facilitate innovation in financial products and services under controlled conditions.
The proposed legislation further seeks to ensure a transparent and consultative process for the issuance of subordinate legislation, including regulations and guidelines, reinforcing predictability for market participants.
