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19 Dec 2025·Source: The Indian Express
2 min
EconomyPolity & GovernanceNEWS

Market Code Bill Faces Scrutiny Over Centralized Powers

Finance Minister proposes sending the Market Code Bill to a panel amidst concerns over excessive powers.

Market Code Bill Faces Scrutiny Over Centralized Powers

Photo by Kin Shing Lai

The Finance Minister has proposed sending the new Market Code Bill to a parliamentary standing committee for further scrutiny, following concerns raised by the Congress party about the bill granting "excessive powers" to a single body. The bill aims to consolidate and amend laws relating to the securities market, replacing existing acts like the SEBI Act, Depositories Act, and Securities Contracts (Regulation) Act.

Critics argue that centralizing such vast powers could undermine checks and balances and potentially lead to misuse. Referring the bill to a parliamentary panel allows for detailed examination, stakeholder consultation, and potential amendments, ensuring a more robust and democratic legislative process.

Key Facts

1.

Market Code Bill to be sent to parliamentary panel

2.

aims to consolidate securities market laws

UPSC Exam Angles

1.

Legislative process and role of Parliamentary Standing Committees in India.

2.

Regulatory framework of the Indian securities market and the role of SEBI.

3.

Principles of good governance, checks and balances, and prevention of concentration of power.

4.

Financial sector reforms and their impact on market efficiency and investor protection.

Visual Insights

Legislative Process with Parliamentary Committee Scrutiny (Market Code Bill Context)

This flowchart illustrates the typical legislative process in India, highlighting the stage where a bill, like the proposed Market Code Bill, is referred to a Parliamentary Standing Committee for detailed examination, as proposed by the Finance Minister.

  1. 1.Introduction of Bill (Lok Sabha/Rajya Sabha)
  2. 2.First Reading (Publication in Gazette)
  3. 3.Second Reading (General Discussion)
  4. 4.Referral to Parliamentary Standing Committee
  5. 5.Committee Scrutiny, Stakeholder Consultation, Report Submission
  6. 6.Consideration of Committee Report by Parliament
  7. 7.Second Reading (Clause-by-Clause Consideration & Amendments)
  8. 8.Third Reading (Vote on Bill as a whole)
  9. 9.Passage in First House
  10. 10.Passage in Second House (Similar Process)
  11. 11.Presidential Assent
  12. 12.Bill Becomes an Act (Law)

Evolution of Indian Securities Market Regulation & Key Acts

This timeline highlights the significant milestones in the regulation of India's securities market, showing the historical context for the proposed Market Code Bill which aims to consolidate existing acts.

India's securities market regulation has evolved from basic control mechanisms to a comprehensive framework under SEBI, driven by economic reforms and technological advancements. The proposed Market Code Bill represents the next logical step towards streamlining and modernizing this framework by consolidating disparate acts.

  • 1956Securities Contracts (Regulation) Act (SCRA) enacted to regulate stock exchanges and transactions.
  • 1988SEBI established as a non-statutory body to promote orderly and healthy growth of the securities market.
  • 1991Economic Liberalization reforms begin, paving the way for significant financial sector changes.
  • 1992SEBI granted statutory powers through the SEBI Act, 1992, becoming the primary regulator.
  • 1996Depositories Act enacted, facilitating dematerialization of securities and electronic trading.
  • 2015SEBI introduces new regulations for REITs and InvITs, diversifying investment avenues.
  • 2020Increased retail investor participation post-COVID-19, driven by digitalization.
  • 2023Implementation of T+1 settlement cycle for Indian equities, enhancing market efficiency.
  • 2025Finance Minister proposes Market Code Bill to consolidate SEBI Act, SCRA, and Depositories Act, sending it to parliamentary committee for scrutiny.
More Information

Background

The Indian financial sector has seen various reforms aimed at streamlining regulations and enhancing market efficiency. The idea of consolidating financial laws has been discussed for a while, notably by the Financial Sector Legislative Reforms Commission (FSLRC) which submitted its report in 2015, recommending a unified financial code. Existing laws like the SEBI Act, Depositories Act, and Securities Contracts (Regulation) Act, 1956, have evolved independently over decades, leading to potential overlaps or gaps.

Latest Developments

The Finance Minister has proposed a new Market Code Bill to consolidate and amend laws relating to the securities market. This bill aims to replace several existing acts.

However, concerns have been raised by opposition parties, particularly the Congress, regarding the potential for 'excessive powers' to be granted to a single body, which could undermine the system of checks and balances. Consequently, the bill is being referred to a parliamentary standing committee for detailed scrutiny, stakeholder consultation, and potential amendments.

Practice Questions (MCQs)

1. With reference to the proposed Market Code Bill and the Indian securities market, consider the following statements: 1. The Market Code Bill aims to consolidate and amend laws, replacing the Securities and Exchange Board of India Act, the Depositories Act, and the Securities Contracts (Regulation) Act. 2. Referral of a bill to a Parliamentary Standing Committee is a mandatory step for all financial bills before they can be debated in the Houses of Parliament. 3. Parliamentary Standing Committees are permanent bodies that play a crucial role in detailed scrutiny of bills and departmental budgets. Which of the statements given above is/are correct?

  • A.1 and 2 only
  • B.1 and 3 only
  • C.3 only
  • D.1, 2 and 3
Show Answer

Answer: B

Statement 1 is correct. The news explicitly states that the bill aims to consolidate and amend laws relating to the securities market, replacing existing acts like the SEBI Act, Depositories Act, and Securities Contracts (Regulation) Act. Statement 2 is incorrect. While it is a common and recommended practice for complex bills, especially financial ones, to be referred to a Parliamentary Standing Committee, it is not mandatory for all financial bills. The decision rests with the presiding officer of the House. Statement 3 is correct. Parliamentary Standing Committees are permanent (standing) bodies constituted for a fixed term, and they perform detailed scrutiny of bills referred to them, departmental budgets, and various policy matters, providing expert input and facilitating public consultation. Therefore, statements 1 and 3 are correct.

2. In the context of the Indian securities market, which of the following statements is NOT correct regarding the existing regulatory framework?

  • A.The Securities and Exchange Board of India (SEBI) was established as a statutory body in 1992 to protect investor interests and promote the development of the securities market.
  • B.The Securities Contracts (Regulation) Act, 1956 primarily provides for the regulation of transactions in securities and the working of stock exchanges.
  • C.The Depositories Act, 1996 enabled the dematerialization of securities, thereby eliminating physical share certificates.
  • D.The Reserve Bank of India (RBI) is the primary regulator for mutual funds and venture capital funds in India.
Show Answer

Answer: D

Statement A is correct. SEBI was given statutory powers in 1992 through the SEBI Act, 1992, following its initial establishment in 1988. Statement B is correct. The SCRR Act, 1956, is a foundational law for regulating stock exchanges and contracts in securities. Statement C is correct. The Depositories Act, 1996, introduced the concept of depositories and dematerialization, revolutionizing securities trading. Statement D is incorrect. While RBI regulates banks and some financial institutions, SEBI is the primary regulator for mutual funds and venture capital funds in India, under its mandate to regulate the securities market. Therefore, this statement is NOT correct.

3. Assertion (A): The proposed Market Code Bill is being referred to a Parliamentary Standing Committee following concerns about granting 'excessive powers' to a single body. Reason (R): Parliamentary Standing Committees serve as a vital mechanism for legislative oversight, ensuring detailed scrutiny, stakeholder consultation, and upholding the principle of checks and balances in governance. Which one of the following is correct in respect of the above statements?

  • A.Both A and R are true and R is the correct explanation of A.
  • B.Both A and R are true but R is not the correct explanation of A.
  • C.A is true but R is false.
  • D.A is false but R is true.
Show Answer

Answer: A

Assertion (A) is true. The news article clearly states that the bill is being referred to a parliamentary standing committee due to concerns raised about 'excessive powers' to a single body. Reason (R) is true. Parliamentary Standing Committees are indeed crucial for legislative oversight, allowing for detailed examination of bills, gathering inputs from various stakeholders, and acting as a check on potential overreach or flaws in legislation, thereby upholding the principle of checks and balances. Furthermore, Reason (R) provides a correct explanation for Assertion (A). The concerns about 'excessive powers' directly necessitate the kind of scrutiny and oversight that a Parliamentary Standing Committee provides to ensure checks and balances are maintained. Therefore, R correctly explains A.

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