Now Reading: SEBI readies AI rules with kill-switch, human oversight
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SEBI readies AI rules with kill-switch, human oversight
The Securities and Exchange Board of India (SEBI) is preparing guidelines for the responsible use of artificial intelligence (AI) and machine learning (ML) in the securities market, SEBI chairman Tuhin Kanta Pandey…
The Securities and Exchange Board of India (SEBI) is preparing guidelines for the responsible use of artificial intelligence (AI) and machine learning (ML) in the securities market, SEBI chairman Tuhin Kanta Pandey announced at the 23rd FICCI Capital Markets Conference 2026. The proposed tiered framework will include human oversight requirements, stronger data controls, and kill-switch mechanisms to halt AI systems if they behave abnormally.
The move follows a May 2025 SEBI circular requiring mutual funds to report their use of AI or ML applications. That circular mandated disclosures on how AI is implemented and what safeguards exist. The new market-wide framework is expected to build on this, adding liability and explainability standards, as AI becomes more embedded in investment advice and compliance.
Indian Opinion Analysis
SEBI already uses AI tools itself, such as Project SUDARSAN, which scans social media for fraudulent investment content, and R(AI)DAR, which reviews mutual fund ads for misleading claims. The challenge ahead is not just writing rules but enforcing them as AI models become more opaque. The next concrete test will be how SEBI handles cases where an AI-driven system causes investor losses, and whether its liability framework assigns responsibility to the firm regardless of whether the tech was built in-house or procured externally. Watch for the draft guidelines, expected later this year.
Source: barandbench.com
This story was synthesised by AI from the source linked above.
