SEBI to issue AI market guidelines soon, Pandey says
SEBI chairman Tuhin Kanta Pandey says AI guidelines for capital markets are coming soon, with human oversight, cyber and quantum risk plans also outlined.
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The Securities and Exchange Board of India will soon publish detailed guidelines on responsible use of artificial intelligence in the capital markets, chairman Tuhin Kanta Pandey said on Saturday, according to Mint. He said the framework would weigh innovation against investor protection, market integrity and financial stability.
Speaking at the inauguration of SEBI’s pavilion at the 45th India International Trade Fair (IITF) 2026, organised by the India Trade Promotion Organisation (ITPO), Pandey said the guidelines would set guardrails for market participants. BusinessLine reported that the emphasis would fall on balancing innovation with safeguards for investors.
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Key facts
- SEBI floated a consultation paper in June 2025 proposing guiding principles for AI and machine learning applications and models in securities markets.
- The pending guidelines are expected to cover disclosures, accountability of regulated entities and a ‘human-in-the-loop’ approach, so that critical AI-driven decisions stay under human oversight.
- SEBI introduced a structured incident response mechanism in May this year, aligned with the Financial Stability Board’s FIRE reporting template, BusinessLine reported.
- Pandey said SEBI has constituted a working group to examine how to make the Innovators Growth Platform more attractive to startups, especially deep-technology and biotechnology companies.
- SEBI is taking an inventory of cryptographic systems and mapping where cryptography is used, to assess possible vulnerabilities, he said.
Cyber threats and crypto platforms
Pandey pointed to growing cyberattack threats aimed at financial institutions and cryptocurrency platforms, and to rising digital fraud involving social media influencers. Both reports carry the remarks. He said SEBI was continuously strengthening its cybersecurity infrastructure to handle evolving risks and protect the securities market.
On quantum computing, Pandey said markets worldwide are preparing for related risks, with concerns expected to become more pronounced during 2032-35, and that groundwork must be finished well ahead of time. SEBI has already built supervisory tools including its ‘Sudarshan’ platform, which is being demonstrated at international regulatory forums, and is strengthening its AI capabilities through international initiatives and supervisory toolkits.
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Startup listing review
Pandey acknowledged the Innovators Growth Platform has not gained the desired traction. The working group will look at changes that could let long-gestation businesses reach public markets earlier, while giving investors clearer information about the risks of early-stage companies and a chance to share in their long-term growth. SEBI is also reviewing its broader regulatory framework to ensure market participants’ AI adoption does not undermine investor protection, market safety or market integrity. Pandey declined to disclose details of budget-related discussions.
Why it matters
The guidelines would be the first formal conduct rules for AI use by brokers, funds and other regulated intermediaries in India, moving the June 2025 consultation from principles to enforceable expectations. Firms that lean on models for trading, advice or compliance would need documented oversight and accountability. The cyber and quantum work sits alongside those rules, reflecting the regulator’s view that technology risk in securities markets is now a supervisory matter rather than an operational one.
What to watch
The timing and text of the AI guidelines are the next milestone, followed by feedback from market participants. Also watch the Innovators Growth Platform working group’s proposals, which would need SEBI board approval, and any further quantum-readiness updates from the regulator.
Sources: Mint, BusinessLine
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