India to harmonise rules for securities and stock markets

Out-Law News | 16 Feb 2021 | 12:56 pm | 1 min. read

The Indian government will introduce a single unified set of laws governing the trade in securities and stocks.

India’s finance minister Nirmala Sitharaman said the government will consolidate several existing laws, such as the Government Securities Act, the Securities and Exchange Board of India Act and the Depositories Act.

According to experts the consolidation will help to simplify the regulatory and compliance processes for Indian financial markets and will improve India's ranking in the Ease of Doing Business index, by which the World Bank Group assesses the conditions for local economies in 190 countries.

"This is a much-needed progressive step towards creating a modern and cohesive capital markets ecosystem and will enhance the confidence of market participants," said Dr. Susanne Lenz, an international capital markets expert at Pinsent Masons, the law firm behind Out-Law.

According to The Hindu Business Line, the proposed move could reduce compliance costs and reduce the friction between rules enacted by the Securities and Exchange Board of India (SEBI), depositories and the government.

The government said that it also intends to introduce investor charters to provide a higher protection for investments in all financial products.  

"A consolidation of laws into a hopefully much simpler, business-friendly and streamlined unified Securities Code along with the promulgation of the investor charter will give India another boost in its ease of doing business," said commercial law expert Ishan Zahoor of Pinsent Masons.

Sitharaman also proposed creating a permanent institutional framework in the corporate bond market: A new body would purchase investment grade debt securities in stressed and normal times and thus help to develop the market.

"This is likely to increase market liquidity and thereby the confidence of investors," said Dušan Stojković, an expert in international capital markets at Pinsent Masons. "How exactly this could work remains to be seen once the rules are out."