Securities Market Code Bill seeks to expand Sebi’s board to 15 members

Securities Market Code Bill introduced in the Lok Sabha on Thursday seeks to strengthen the regulatory mechanism of the Sebi by expanding the board up to 15 members from existing nine members, including chairperson providing a transparent and consultative process for issuing any subordinate legislation among other things.

The Bill proposes new ground for removal of member if he has acquired any financial or other interests that are likely to prejudice his function. It requires a member to disclose any “direct or indirect” interest, including such interest of family members concerning the subject matter of the Board meeting, and refrain from participation where such interests exist.

The Bill proposes to grant Securities and Exchange Board of India (Sebi) with additional functions like reviewing its performance and functioning, and the proportionality and effectiveness of its regulations, new progressive features such as capacity building of its employees and research, periodic study.

Sebi is required to lay down principles for guiding the implementation of the Code. The Bill, referred to Standing Committee for further consultation, seeks to consolidate, rationalise and replace the three securities laws -- Securities Contracts (Regulation) Act, 1956; Securities and Exchange Board of India Act, 1992; and Depositories Act, 1996. Further, to facilitate effective regulation, Sebi has been empowered to delegate some part of its registration function to market infrastructure institutions and self-regulatory organisations.

The code endeavours to build a principle-based legislative framework to reduce the compliance burden, improve regulatory governance, and enhance the dynamism of technology-driven securities markets, as per the Statement of Objects and Reasons of the Bill.