• The Standing Committee on Finance (Chair: Mr Bhartruhari Mahtab) presented its report on the Securities Markets Code, 2025 on July 23, 2026.  The Code was introduced in Lok Sabha in December 2025.  It seeks to consolidate and replace: (i) the Securities Contracts (Regulation) Act, 1956, (ii) the Securities and Exchange Board of India (SEBI) Act, 1992 and (iii) the Depositories Act, 1996.  Key observations and recommendations of the Committee include:

• Delegation of powers:  The Committee observed that several provisions confer broad discretionary powers upon SEBI.  It further observed that in the absence of adequate guidance, such powers may create legal uncertainty, inconsistent interpretations, and diminish regulatory certainty.  Delegated legislation should not determine matters of essential legislative policy or substantive legal consequences.  It recommended that every provision on regulation-making powers should clearly define the scope, purpose, and limits of such delegation.

It recommended deleting the provision under which SEBI could expand the definition of market abuse through Regulations.  Under the Code, market abuse is punishable with imprisonment, fine, or both.  Further, the Code empowers SEBI to specify adjudication procedure through Regulations.  The Committee observed that matters such as procedural safeguards for adjudication should be governed by clear statutory principles.  The Code also empowers SEBI to delegate registration and supervisory functions to Market Infrastructure Institutions (MIIs) and self-regulatory organizations.  MIIs include exchanges, clearing corporations, and depositories.  The Committee recommended that the Code should clearly specify: (i) nature and extent of the functions that may be delegated and principles governing them, (ii) accountability framework for these entities, (iii) review mechanism for their decisions, and (iv) supervisory and oversight powers of SEBI.

• Offences and penalties:  The Committee observed that while the Code seeks to limit criminal liability to serious and systemic misconduct, certain civil defaults and criminal offences as described in the Code overlap.  This risks uncertain enforcement and litigation.  It recommended restructuring and comprehensive re-drafting of clauses on offences.

• Appeals to SAT:  The Code lists categories of orders by SEBI and its adjudicating officers that
  may be appealed before the Securities Appellate Tribunal (SAT).  The Committee observed that orders not specifically listed, including certain interim orders, may fall outside SAT’s jurisdiction.  It recommended that any person aggrieved by an order of SEBI or an adjudicating officer be allowed to file an appeal before SAT.

• MIIs:  The Committee observed that MIIs are of systemic importance.  It recommended that SEBI’s powers to cancel registration must require consultation with the central government.  Further, framing of bye-laws of MIIs must involve public consultation ordinarily.  MIIs should also be empowered to take interim disciplinary actions without a prior hearing, to deal with exceptional circumstances.  Under the Code, the central government may supersede an MII in specified cases.  The Committee recommended specifying a maximum period for supersession, so that it remains a temporary and exceptional measure.

• Exemption to PSUs:  The Code empowers the central government to exempt public sector undertakings (PSUs) from listing and disclosure requirements under the SEBI Regulations.  The Committee observed that as a general principle, such requirements should apply equally to public sector and private sector entities.  It recommended that any such exemption should be granted on a case-to-case basis in public interest.  Further, reasons must be recorded in writing.

• Investigation and adjudication:  The Committee recommended specifically empowering the Board to frame Regulations on methodology and criteria for quantification of unlawful gains and losses.  It observed that this will ensure greater certainty and uniformity in adjudication.  The Code states that an investigation must be completed within 180 days.  The Committee recommended enhancing this period to one year.  It noted that most investigations take about one year to one-and-a-half years.

• Investor grievance redressal:  As per the Code, SEBI “may” provide for an investor grievance redressal mechanism and make an investor charter.  The Committee recommended changing “may” to “shall”, to make it mandatory to undertake these measures.  Under the Code, SEBI may designate an Ombudsperson for redressing specified grievances.  The Committee recommended adding an outer limit of 120 days for redressal by the Ombudsperson.