Proposed Securities Market Code to be a reality soon: Sitharaman

Nirmala Sitharaman speaking at the launch of ARCL and CDMDF for corporate bond market development on July 28.

The proposed Securities Market Code, which looks to consolidate all laws dealing with the specific market, is expected to become a reality soon, Finance Minister Nirmala Sitharaman said while speaking at the launch of ARCL and CDMDF for corporate bond market development on July 28.

“A lot of groundwork on the Securities Market Code has already been done and I expect this new code to become a reality soon,” the Union finance minister said.

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A proposal was announced in the Union Budget for the financial year 2021-22 where Sitharaman had proposed merging some of the most important Acts that govern the capital and securities markets into one common code.

It is vital in my opinion as it is intended to consolidate the three different laws – the SCRA of 1956, SEBI Act of 1992 and the Depositories Act of 1996 into a single Act with an updated and rationalised set of provisions, Sitharaman had said, adding that “the Securities Market Code is intended to be future-ready, take into account developments from a long-term perspective, as well as promote ease of doing business.”

The SEBI Act empowers the regulatory body to scrutinise the capital markets under various regulations while ensuring investor interest is always protected. The Securities Contracts (Regulation) Act, or SCRA, largely governs the affairs of the stock exchange, while the Depositories Act regulates the depositories of the country that hold securities worth billions of dollars.

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Noting the rise in demat accounts on the retail side, Sitharaman said, “The number of stock market investors, especially retail reflects the strength of the economy as an increasing quantum of household savings makes its way to this liquid, transparent, formal and also well-regulated segment of investing.”