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The central government has referred the Securities Markets Code Bill, 2025, to a select committee soon after introducing it in Parliament. The draft legislation combines three major laws -- the SEBI Act, the Depositories Act and the Securities Contracts (Regulation) Act -- and seeks to consolidate and simplify the country's securities market norms.

A key feature of the proposed law is a provision to classify offenses into two categories: fraud and unfair practices, which would attract civil penalties, and market abuse, which would warrant criminal action.

Under the existing laws, there are a host of omnibus clauses in all three Acts, attracting civil penalties as well as criminal action.

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Under the proposed law, illegal market activities such as front running and insider trading -- recognised as serious offences under the market abuse category, as it hurts market integrity -- may attract up to 10 years of imprisonment or up to Rs 25 crore penalty, or both.

In the existing framework, any violation of the provisions of the three laws can attract up to 10 years of jail.

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The uniform securities code decriminalises such activities, limiting up to 10 years of jail or Rs 25 crore fine, or both, only to serious offenses under the market abuse category.

Additionally, Clause 95 of the Securities Market Code Bill states that failure to cooperate with SEBI investigations may be punishable, attracting up to one year jail or up to Rs 1 crore fine, or both.

In the existing framework, a similar provision exists in Section 11C (5) of the SEBI Act, 1992.

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The central government plans to consolidate multiple existing laws into a single, rationalised framework.

These include:

The main purpose of the unified set of legislations is to bring greater clarity, consistency and efficiency to the regulation of the country's securities markets, reducing overlaps and removing inconsistencies while making compliance easier for all market participants.