SEBI plans AI usage guidelines for capital markets with focus on investor safety

New Delhi, Nov 15: Markets regulator SEBI is set to issue detailed guidelines for the responsible use of Artificial Intelligence (AI) in capital markets, with safeguards focused on investor protection, accountability and human oversight.

Speaking at the 45th India International Trade Fair (IITF) 2026, SEBI Chairman Tuhin Kanta Pandey said the framework would mandate disclosures by market participants, ensure accountability of regulated entities and adopt a "human-in-the-loop" approach so that critical decisions remain under human supervision.

The initiative follows SEBI's 2025 consultation paper on AI and Machine Learning (ML) in securities markets. The regulator aims to balance innovation with market integrity and financial stability.

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Pandey also highlighted rising cybersecurity threats, including attacks on financial institutions, cryptocurrency platforms and frauds linked to social media influencers.

To strengthen cyber resilience, SEBI introduced a structured incident response mechanism earlier this year aligned with the Financial Stability Board's FIRE reporting template.

On quantum computing, he said SEBI is assessing cryptographic systems and possible vulnerabilities, noting that related security risks are expected to become more significant between 2032 and 2035.

The regulator is also enhancing its AI-driven supervisory capabilities through tools such as "Sudarshan", which is being showcased at international regulatory forums.

Separately, Pandey said SEBI has formed a working group to explore ways to make the Innovators Growth Platform (IGP) more attractive for startups, particularly deep-tech and biotechnology firms.

(IANS)