Govt said to accept tweaks to Securities Markets Code draft

New Delhi: It is learned that the government has agreed to several important changes in the proposed Securities Markets Code (SMC); These include extending securities market research periods from 180 days to one year, empowering depositories to correct records and clarifying that the Centre’s power to supersede market infrastructure authority boards will be exercised on the recommendation of Sebi.

The changes were suggested by various stakeholders, including Sebi and others, during discussions between the Parliamentary Standing Committee on Finance, chaired by BJP MP Bhartruhari Mahtab. The panel is in discussions with the Ministry of Economic Affairs on the proposed legislation and is expected to submit its report to the Lok Sabha Speaker ahead of the Monsoon Session.

According to the presentation made by DEA officials before the committee, it was claimed that the stakeholder consultation process generated 1,055 comments, 665 of which were unique.

Of these, 62 suggestions were accepted, 584 were not concluded positively, and 19 were considered to have already been addressed in the draft law.

One of the most important changes relates to investigations. The Ministry of Finance stated that it accepted the proposed 180-day period to be reconsidered and could extend this period to 365 days for investigations. This decision comes after stakeholders argued that complex cases involving insider trading, market manipulation and securities fraud may require more time.

The government has also agreed to expand appeals under the new law by ensuring that orders made by Adjudicating Officers are appealable before the Securities Appellate Tribunal. It also agreed to set an outer limit for condoning delay in appeals before the SAT.
Under another investor protection measure, the Ministry agreed to provide depositors with the authority to correct records in cases involving fraud, forgery, duress or technical glitches. On the issue of removal of boards of directors of Market Infrastructure Institutions (MIIs) and Self-Regulatory Organizations (SROs), the government has clarified that the power will be given to the central government, but this will be implemented on the recommendation of Sebi.

The Ministry of Finance said the provision builds on powers already available under section 11 of the Securities Contracts (Regulation) Act and has been extended to all MIIs under the proposed Act.