AI/ML guidelines for India's market to be introduced soon: Sebi chairman Pandey

The Securities and Exchange Board of India (Sebi) Chairman Tuhin Kanta Pandey on Wednesday said the regulator will introduce guidelines for AI and ML in markets shortly. They will provide a tiered approach with an emphasis on clear accountability and governance controls, Pandey said.

The framework shall require kill switch along with humans in the loop controls along with data controls. "The aim is to balance innovation with investor protection," Pandey added, speaking at the 23rd annual Capital Markets conference, with a focus on "Capital Markets as the Gateway to India's Future: AI, Financialization and New Investment Frontiers."

"The rulebook itself must keep pace. The settlement regulations are undergoing a comprehensive overhaul. The proposed framework will be rational, less discretionary, simpler and faster," he said. "This will make capital raising easier," he said. Industry associations will have an important role to play in our journey, he added.

Sebi is also considering a major overhaul of the framework governing initial public offerings (IPOs) on the Small and Medium Enterprises (SMEs).  

 "India's capita; markets are entering a new phase and institutions must be built at scale. The task is to turn that scale into depth, resilience, and opportunity," Pandey told the audience. "AI, financialisation, and new investment frontiers are not separate themes. Together, they can make markets smarter, widen participation and connect capital with new businesses, assets and opportunities," he said.

"All of this rests on one foundation which is trust. Our responsibility is to keep this gateway to India open, innovative and trusted," Pandey said.  

He added that India's capital markets are no more a barometer of economic activity, they are a driver of it. In FY26, equity issuance crossed ₹4.5 lakh crore, out of which ₹1.9 lakh crore raised through 366 IPOs. Corporate bond issuances exceeded ₹9 lakh crore in FY26.  

Pandey also told the media that Sebi will take strict action if there was any attempt to manipulate the Closing Auction Session (CAS) system, at the sidelines of the FICCI conference. "We want to make once thing clear. If people do manipulation in CAS, we will take strict and immediate action," he added. Earlier this week, Pandey said that the CAS was here to stay.  The regulation is gathering data and analysing it, he had said.