SEBI assures continuous evolving mechanism to thwart possible cyberattacks
Vulnerability testing, patch testing, patching quickly, all these activities are continuously taking place, says Pandey
Amid a surge in cyberattacks, including significant breaches like the one at Binance, SEBI Chairman Tuhin Kanta Pandey assured stakeholders that the regulator's systems are in a constant state of evolution to ward off emerging threats. He announced that SEBI will soon release guidelines for the responsible utilization of artificial intelligence (AI) and machine learning (ML) in financial markets.
Pandey mentioned that vulnerability testing, patch testing, and timely patching are ongoing activities. During the recent meeting of the International Organization of Securities Commissions (IOSCO), discussions centered around AI, cybersecurity, and quantum technologies, according to Pandey. He detailed that SEBI's proposed guidelines for AI/ML usage would establish appropriate guardrails, encompassing disclosures, accountability for regulated entities, and a 'human-in-the-loop' approach to ensure critical decisions undergo human oversight.
In June 2025, SEBI released a consultation paper proposing guiding principles for responsible AI/ML application in securities markets to balance benefits and risks, safeguarding investor protection, market integrity, and financial stability. Pandey, speaking at the inauguration of SEBI's pavilion at the 45th India International Trade Fair (IITF) 2026, highlighted the regulator's continuous reinforcement of its cybersecurity framework to counter increasing cyber threats targeting financial institutions and cryptocurrency platforms, as well as digital fraud involving social media influencers.
The regulator introduced a structured incident response mechanism in May, aligned with the Financial Stability Board’s FIRE reporting template. Concerning quantum computing risks, Pandey stated that SEBI is compiling an inventory of cryptographic systems and identifying areas where cryptographic measures are employed to evaluate potential vulnerabilities.
He noted that global markets are preparing for quantum computing risks, with concerns anticipated to escalate around 2032-35, emphasizing the necessity of initiating preparations well ahead of time. Pandey also highlighted SEBI's development of supervisory tools, such as the 'Sudarshan' tool, showcased at international regulatory forums.
Furthermore, the regulator is enhancing its AI capabilities through international initiatives and supervisory toolkits, all while reviewing the regulatory framework to prevent AI usage by market participants from undermining investor protection, market safety, or integrity. Regarding start-ups and the listing framework, Pandey disclosed that SEBI has established a working group to explore ways to make the Innovators Growth Platform (IGP) more appealing for deep-tech and biotech startups with extended gestation periods before profitability.
The regulator aims to address the platform's lackluster participation by reviewing potential modifications to facilitate earlier access to public markets for these companies, acknowledging the higher risks involved while encouraging participation in their long-term growth potential.
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