The Parliamentary Standing Committee on Finance, led by senior BJP leader Bhartruhari Mahtab, has submitted its report on The Securities Markets Code, 2025 Bill. The panel backed key structural reforms to overhaul India’s capital market regulatory architecture, while proposing tighter ethics rules and extended investigation timelines.
Key Recommendations & Proposals
1. Doubling the Cooling-Off Period
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The panel proposed doubling the cooling-off period from 1 year to 2 years for the SEBI Chairperson and Whole-Time Members (WTMs) before they can take up private post-retirement employment.
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Objective: Prevent potential conflicts of interest, post-regulatory influence, and revolving-door practices in the financial sector.
2. Expanding the SEBI Board
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Supported expanding SEBI’s board strength from 9 to 15 members to better manage the growing volume and complexity of India’s securities markets.
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Recommended routing all appointments to the expanded board through the Financial Sector Regulatory Appointments Search Committee (FSRASC) to improve independence and operational transparency.
3. Formalizing Crypto & Virtual Digital Assets (VDA) Oversight
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Urged the government to establish a formal regulatory framework for Virtual Digital Assets (VDAs) like cryptocurrencies to eliminate regulatory uncertainty and protect retail investors.
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Advised setting up an interim self-regulatory mechanism under official oversight until primary legislation is passed.
4. Extended Timelines & Dispute Redressal
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Investigation Deadlines: Recommended expanding SEBI’s investigation timeline from the proposed 180 days to up to 1 year for complex, multi-layered market abuse cases.
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Grievance Redressal: Proposed a strict 120-day outer limit for the Ombudsperson to resolve investor complaints.
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Civil vs. Criminal Distinctions: Pushed for a clear statutory boundary separating minor civil defaults from deliberate criminal market abuse to prevent arbitrary criminalization.
Context: Consolidation of Market Laws
The proposed Securities Markets Code seeks to unify three legacy statutes—the Securities Contracts (Regulation) Act, 1956, the SEBI Act, 1992, and the Depositories Act, 1996—into a single, principles-based framework. The Finance Ministry will review the panel’s recommendations before introducing a revised Bill in Parliament for final clearance.
