SEBI Chairman Tuhin Kanta Pandey announced at ET NOW Markets Summit 2026 that SEBI will issue comprehensive guidelines on responsible use of artificial intelligence in capital markets. The framework addresses AI benefits like improved surveillance, risk assessment, fraud detection, and investor servicing while tackling risks including opacity, bias, data protection, cybersecurity, and accountability. SEBI will integrate IOSCO's AI supervisory toolkit into its strategy for regulated entities.

SEBI's AI guidelines represent a proactive regulatory approach to emerging technology in financial markets. The initiative acknowledges AI's dual nature - while it can enhance market surveillance, automate compliance monitoring, improve risk assessment models, and detect fraudulent patterns more efficiently than traditional methods, it also poses significant regulatory challenges. Key concerns include algorithmic bias affecting fair market access, lack of transparency in AI decision-making processes, data privacy violations, cybersecurity vulnerabilities, and accountability gaps when AI systems make erroneous decisions. The integration of IOSCO's international toolkit ensures global regulatory alignment. This move positions India among forward-thinking financial regulators globally, similar to EU's AI Act and SEC's technology governance frameworks. The guidelines will likely cover algorithmic trading systems, robo-advisory services, AI-driven research platforms, and automated compliance tools. For capital market participants - brokers, asset managers, exchanges - this means mandatory disclosure of AI usage, risk management protocols, and audit trails. The timing coincides with increasing retail investor participation through digital platforms and growing institutional adoption of AI for portfolio management and market analysis.