SEBI plans a responsible AI/ML framework for Indian securities markets, introducing kill switches, human oversight, and stricter data controls to protect investor privacy, security, and data integrity.

The framework will adopt a tiered governance model with clear accountability, emphasizing humans-in-the-loop and safeguards against opacity, bias, cybersecurity risks, and data protection failures.

Current obligations require every regulated entity to be fully responsible for the AI/ML tools they use, whether developed in-house or procured from third parties.

Broader reforms aim to widen participation and financing channels, including foreign investment in portfolios, PMS access for mass-affluent investors via mutual-fund-only structures, digital onboarding for non-residents, expanded FPI access to non-agricultural derivatives, tokenisation of corporate bonds, a retail-focused Credit Risk-o-Meter, and greater REIT/InvIT exposure to projects under construction, with details still under consultation.

Growth indicators cited include AIF investments around Rs 7 lakh crore by late July 2026, market capitalization about 132% of GDP, roughly 14.9 crore unique investors, mutual fund assets near Rs 86 lakh crore, and SIPs accounting for over a fifth of industry assets.

K V R Murty noted that introducing CAS in the equity cash segment marked a major step in reflecting market consensus in closing prices.

The remarks were delivered at the 23rd FICCI CAPAM conference in 2026.

Regulator will review market-making, underwriting, and migration requirements, including paid-up capital, to enhance SME market functioning.

Pandey stressed that new rules should widen investment opportunities and deepen financing channels while remaining future-ready without compromising investor protection.

The article notes that the perspectives are the author’s and may not reflect Business Standard’s official stance.

The overarching goal is to foster innovation while safeguarding market integrity, reducing discretionary risk, and improving efficiency in settlements and SME funding.

Technology is central to market infrastructure, with digital KYC, paperless onboarding, mobile platforms, and electronic payments reducing investment friction.