AI sharpens cyber battle across financial markets

Artificial intelligence is transforming the cybersecurity landscape across India's financial markets, according to the Securities and Exchange Board of India (SEBI). The technology is both bolstering defensive measures and enabling more sophisticated cyber attacks. SEBI Executive Director Avneesh Pandey warns that gaps in technology, skills and third-party security could leave the broader financial ecosystem exposed.

Cybersecurity is described as a rapidly escalating contest, with attackers gaining access to increasingly advanced AI tools while defenders deploy machine learning to identify threats. SEBI's own AI initiatives, such as Project SUDARSAN and RDAR, illustrate the technology's growing role. However, disparities in cyber preparedness among regulated organizations present vulnerabilities, as weaker entities can compromise interconnected platforms and supply chains.

SEBI Chairman Tuhin Kanta Pandey urges financial institutions to treat cyber defense as a board-level responsibility. The regulator's Cybersecurity and Cyber Resilience Framework is being tested by the rapid adoption of AI and other emerging technologies by threat actors. In 2025-26, SEBI received 36 cybersecurity incidents, with data exfiltration being the most common.

The regulator has established Market Security Operations Centres to provide smaller entities with monitoring, detection and incident response capabilities. SEBI's Cyber Defence Symposium aims to enhance operational preparedness by simulating attacks and exercises across various domains, including AI. NISM is also developing certification programs to address the growing demand for cybersecurity professionals with expertise in financial-market regulation.