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Markets regulator Sebi will release detailed guidelines for responsible AI use in capital markets, with its chairman stressing disclosures, accountability and a human-in-the-loop approach to protect investors.
✦ AI SUMMARY 30-second read
- Sebi chairman Tuhin Kanta Pandey confirmed forthcoming AI guidelines covering disclosures, accountability and human oversight of critical decisions.
- Sebi introduced a structured incident response mechanism in May this year, aligned with the Financial Stability Board's FIRE reporting template.
- A working group has been formed to review the Innovators Growth Platform to make it more accessible for deep-tech and biotech startups.
Why it matters: Formal AI guardrails from Sebi will set binding standards for how regulated entities deploy automated tools across Indian securities markets.
This summary was generated by AI. Editors may review and update it.
Sebi will soon issue detailed guidelines governing the use of Artificial Intelligence in India's capital markets, chairman Tuhin Kanta Pandey announced at the inauguration of Sebi's pavilion at the 45th India International Trade Fair 2026, organised by the India Trade Promotion Organisation.
Pandey said the proposed guidelines would establish guardrails covering disclosures, accountability of regulated entities and a human-in-the-loop approach, ensuring that critical decisions remain subject to human oversight rather than being left entirely to automated systems.
The announcement builds on a consultation paper Sebi floated in June 2025, which proposed guiding principles for responsible use of AI and Machine Learning applications in securities markets, aimed at optimising benefits while minimising risks to investor protection, market integrity and financial stability.
Cybersecurity and incident response
Pandey said Sebi has been continuously strengthening its cybersecurity framework to address rising threats targeting financial institutions and cryptocurrency platforms, as well as digital frauds involving social media influencers.
In May this year, the regulator introduced a structured incident response mechanism aligned with the Financial Stability Board's FIRE reporting template, providing a standardised way to report and manage cyber incidents across the securities ecosystem.
Quantum computing and supervisory tools
On quantum computing, Pandey said Sebi is conducting an inventory of cryptographic systems to identify vulnerabilities, noting that concerns from quantum-related risks are expected to become more pronounced globally around 2032-35, and that preparations must be completed well in advance.
Sebi has also developed supervisory AI tools, including its Sudarshan tool, which is being demonstrated at international regulatory forums. The regulator is further strengthening its AI capabilities through international initiatives and supervisory toolkits.
Innovators Growth Platform review
Pandey said Sebi has formed a working group to examine ways to make the Innovators Growth Platform more attractive for startups, particularly deep-tech and biotech companies that require long gestation periods before turning profitable.
He acknowledged that the existing platform has not gained the desired traction and said the regulator is reviewing potential changes to allow such companies to access public markets at an earlier stage. The objective is to give investors clarity about the higher risks involved while enabling participation in long-term growth.
