India Prepares Major Financial Markets Overhaul with New Securities Code
The Indian government is preparing to introduce a landmark financial reform that could transform how the country’s capital markets operate. The Securities Markets Code Bill 2025 is scheduled for presentation during Parliament’s upcoming Winter session. This comprehensive legislation represents the most significant restructuring of India’s securities market framework in decades.
Creating a Unified Regulatory Framework
The new bill aims to consolidate three major financial market regulations into a single, cohesive code. It will merge the Securities and Exchange Board of India Act, the Depositories Act, and the Securities Contracts Regulation Act. These laws currently govern different aspects of market operations separately. The consolidation will create a unified legal structure for India’s rapidly growing financial markets.
This initiative was first announced in the Union Budget for 2021-22. Government officials have been working on the detailed framework since that announcement. The timing of the Winter session introduction suggests the government believes the legislation is now ready for parliamentary debate and approval.
Streamlining Market Operations
The current system requires market participants to navigate multiple regulations that sometimes overlap or create conflicting requirements. The unified code will eliminate this regulatory fragmentation. Companies raising capital, investors trading securities, and intermediaries facilitating transactions will all operate under a single set of rules.
This consolidation is expected to significantly reduce compliance costs for financial institutions and listed companies. Market participants currently spend substantial resources ensuring they meet requirements under multiple acts. The simplified framework will make compliance more straightforward and less expensive.
The new code will also reduce regulatory friction that can slow down market innovation. As digital trading platforms and new financial products evolve, having a single regulatory reference point will make adaptation faster and more efficient.
Benefits for Investors and Market Growth
For individual and institutional investors, the unified code promises greater clarity and protection. The consolidated legislation will make it easier to understand rights and responsibilities in the securities market. This increased transparency could boost investor confidence and participation.
The reforms come at a crucial time for India’s capital markets. The country has seen record numbers of new investors entering the stock market in recent years. Demat accounts have surged from 40.8 million in March 2020 to over 150 million by mid-2024. This growth demands a modern regulatory framework that can support continued expansion.
International investors watching India’s economic rise will also benefit from the simplified regulatory structure. Foreign portfolio investors often cite regulatory complexity as a challenge when considering emerging markets. The new code could make India more attractive to global capital.
Implementation Timeline and Next Steps
If introduced in the Winter session, the bill will undergo parliamentary scrutiny through standing committees and debates. The legislative process typically takes several months unless the government prioritizes it for faster approval. Market participants should monitor the session proceedings closely for the exact provisions and implementation schedule.
The Securities and Exchange Board of India will play a crucial role in implementing the new framework. As the primary market regulator, SEBI will need to align its rules and procedures with the consolidated code. This transition period will require careful coordination between regulators, market institutions, and participants.
This regulatory modernization represents a significant step in India’s journey toward becoming a more mature financial market. By creating a streamlined, contemporary regulatory environment, the government aims to support sustainable market growth while maintaining strong investor protections.
