Securities market Bill in LS

UNDERTHE BILL, the strength of the Sebi board will increase from nine to 15 members. The Code also provides a framework for inter-regulatory coordina- tion, including for the listing of non-traditional securities, and introduces regulatory sand- boxes to facilitate innovation in financial products, contracts and services. In addition, Sebi will be mandated to follow a transparent and consultative process while issuing subordi- nate legislation, conduct peri- odic reviews of regulations, and carry out regulatory impact assessments.

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A key provision seeks to address conflicts of interest by requiring Sebi board members to disclose any “direct or indirect” interests when participating in decision-making. This assumes significance in the wake of recent allegations involving former Sebi chairperson Madhabi Puri Buch and her husband, which had raised concerns over transparency and governance at the regulator.

The SMC also provides for the creation of a reserve fund by Sebi, with any surplus to be transferred to the Consolidated Fund of India, mirroring the RBI’s framework. It introduces a streamlined adjudication process, separating investigation from adjudication to preserve arm’s-length decisionmaking, while prescribing timelines for investigations and interim orders. Further, the Bill proposes post-tenure restrictions that would bar the Sebi chairperson and members from accepting employment with the Centre or state governments, or with securities market service providers or market participants, for one year after demitting office, unless prior government approval is obtained.