India markets regulator weighs domestic AI model for securities trading, chairman says

India's markets regulator, the Securities and Exchange Board of India (SEBI), is exploring the possibility of developing a domestically governed artificial intelligence (AI) model specifically for the securities market, according to Chairman Tuhin Kanta Pandey. Pandey announced this during a summit in Mumbai, stating that SEBI is implementing a global supervisory toolkit for AI, developed by the International Organization of Securities Commissions, to strengthen risk management and create an agile governance framework for AI use in the securities market.

Pandey emphasized that AI-enabled tools could enhance services, risk assessment, and supervision in the securities market. However, he highlighted that their implementation requires reliable data, effective oversight of models, and clear accountability for decisions made by these AI systems.

Furthermore, SEBI is reviewing compliance requirements for foreign investors and intends to issue a consultation paper seeking views on aligning these requirements with global standards. Despite efforts to streamline market access, digital onboarding, and simplify procedures for overseas investors, some domestic compliance requirements remain more stringent than those in other major jurisdictions, according to Pandey.

Pandey noted that India will require both domestic and foreign capital to support its growth ambitions, stating that international participation can widen the pool of capital and bring expertise. In related news, Reuters reported in August that SEBI was planning to relax disclosure requirements for certain offshore funds deemed high-risk. This move followed complaints and legal challenges arising from rules introduced during SEBI's scrutiny of offshore investors linked to the Adani Group.