The Standing Committee on Finance has supported the Securities Markets Code, 2025 and has talked about keeping SEBI at the center. The committee has recommended giving additional statutory responsibilities and broader powers to SEBI to protect investors.
New Delhi, [भारत] July 23 (ANI): The Standing Committee on Finance has broadly supported the Securities Markets Code, 2025, but stressed on a faster and more accountable regulatory framework, with Sebi at the center of market monitoring, investigation and enforcement.
The report emphasizes that the proposed code ‘assigns additional statutory responsibilities’ to SEBI and gives the market regulator wide powers to protect investors, regulate the securities market and lay down guiding principles for implementing the code.
Role and powers of SEBI
The most important recommendation of the committee on the role of SEBI is that the regulator should retain strong operational powers, but with clear statutory limits. It noted that SEBI is the ‘principal regulator of the securities market’ and said it should continue to exercise ‘broad regulatory, supervisory, investigative and enforcement powers’.
Also, the panel has favored tighter controls on extraordinary powers so that SEBI’s authority remains effective without becoming arbitrary.
Recommendation to control powers of investigation
Among the major changes, the committee has recommended that the code be redrafted so that SEBI can initiate inspection or investigation only in narrowly defined cases after the prescribed limitation period.
On this point, the report says: “A mere reference by an investigating agency should not, in itself, be sufficient ground for reopening a case after the expiry of eight years”. It further recommends objective guiding principles to regulate such extraordinary action, arguing that this power should only be used where there are ‘reasonable grounds to believe’ that there is a serious market abuse or systemic effect.
Role of rule making and transparency
The Committee has also supported SEBI’s enhanced rule-making role, particularly in the governance of market infrastructure institutions. It notes that the code ‘enables SEBI to set detailed requirements through regulations’ and says it gives the regulator the flexibility to react to changing market conditions while maintaining the principle of diverse ownership.
The report also notes that rules made by SEBI will be subject to public consultation and parliamentary scrutiny, which it sees as an important transparency safeguard.
Emphasis on institutional scrutiny and clear process
On the broader framework, the Panel welcomed the consolidation of the securities law framework, but called for greater precision in drafting and stronger institutional scrutiny. It wants SEBI’s appointment, adjudication and delegation of powers to be supported by clearer procedures, greater transparency and better separation of functions.
The Committee has argued that these safeguards are necessary to maintain the ‘independence, credibility and effectiveness’ of the regulator.
In fact, the standing committee has sent a clear message: SEBI should get stronger statutory powers under the new code, but those powers should also be accompanied by stringent rules, clear language and objective standards to prevent abuse and strengthen investor confidence. (ANI)
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