Sebi Sets the Stage for Responsible AI/ML Integration in Securities Markets

Sebi proposes guidelines for the responsible use of AI and ML in securities markets, focusing on enhancing market integrity while safeguarding investors. These principles aim to minimize potential risks and ensure reasonable procedures for the supervision of AI/ML applications, with public feedback sought till July 11.

The Securities and Exchange Board of India (Sebi) on Friday introduced new guiding principles aimed at ensuring the responsible implementation of Artificial Intelligence (AI) and Machine Learning (ML) technologies within securities markets. This initiative seeks to enhance investor protection and maintain market integrity.

These guidelines suggest a 'regulatory lite' framework for the deployment of AI/ML for purposes not directly impacting business operations. AI/ML is predominantly used for advisory, monitoring, and risk management in the market. However, its integration poses potential risks that could affect market efficiency and investor relations.

Sebi emphasizes the importance of rigorous control systems to manage these applications. The guidelines were developed by a Sebi-constituted working group, proposing internal teams to oversee AI/ML operations and ensure robust procedures for error handling and security. Public opinion on these proposals is invited by July 11.

(With inputs from agencies.)