India's securities rules tested
Commentators say India’s proposed 2025 Securities Markets Code gives regulators more tools, but recent litigation shows enforcement limits—Punjab and Haryana High Court stayed a Rs 173‑crore SEBI insider‑trading order in the IEX case. Observers also warn that the growing use of behavioural and alternative data in credit and markets will force tougher questions about fairness and explainability. ( )
India’s market regulator is getting a broader rulebook just as a major court fight has exposed how hard big enforcement cases can be to hold. (moneycontrol.com) On April 10, the Punjab and Haryana High Court stayed directions by the Securities and Exchange Board of India against eight people in the Indian Energy Exchange case, including three senior exchange officials. The regulator had ordered them in October 2025 to disgorge about ₹173 crore and barred them from the capital markets. (moneycontrol.com) The case turns on a Central Electricity Regulatory Commission decision on “market coupling,” a plan to create uniform price discovery across power exchanges. Securities and Exchange Board of India said some traders knew about the move before it became public and used put options and related trades before Indian Energy Exchange shares fell about 30% on July 24, 2025. (moneycontrol.com, moneycontrol.com) Indian Energy Exchange has argued that the electricity regulator’s order was not “unpublished price sensitive information” because it applied to the sector, not only to one company. The High Court asked Securities and Exchange Board of India to respond, and Moneycontrol reported the matter is likely to be heard later in April. (moneycontrol.com) At the same time, Parliament has before it a draft Securities Markets Code, 2025, introduced in the Lok Sabha on December 18, 2025. The bill would fold the Securities Contracts (Regulation) Act, 1956, the Securities and Exchange Board of India Act, 1992, and the Depositories Act, 1996 into one statute. (prsindia.org, chambers.com) The draft code gives the regulator a cleaner enforcement spine on paper: inspection, investigation, search and seizure, adjudication, disgorgement, restitution, cease-and-desist orders, settlement, and interim orders all sit in one chapter. Legal commentary has also pointed to statutory limitation periods, a gain-based penalty approach, and an ombudsperson proposal in the bill. (prsindia.org, chambers.com) Another pressure point sits outside insider trading law: lenders and fintech firms are leaning harder on behavioural data, meaning digital traces such as payment regularity, transaction frequency, supplier referrals, and bill-payment patterns. Hindustan Times reported that this data is being pitched as a way to score borrowers with little formal credit history, especially for loans below ₹50,000. (hindustantimes.com) That shift reaches securities regulation too, because the same appetite for alternative data raises questions about what data can be used, how a decision is explained, and when an information edge becomes unfair. The Hindustan Times piece said more than 80% of India’s micro and small businesses remain outside formal finance, while stress in smaller loans has risen, sharpening the push for new scoring tools. (hindustantimes.com) So India is moving on two tracks at once: a larger legal framework for the Securities and Exchange Board of India, and a live court test of how far enforcement can stretch when the disputed information comes from a sector regulator and not a company filing. The next hearing in the Indian Energy Exchange matter will show whether the regulator’s expanded toolkit can survive the first hard questions in court. (moneycontrol.com, prsindia.org)
