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The Securities and Exchange Board of India (SEBI) will shortly issue guidelines for the responsible use of artificial intelligence (AI) and machine learning in capital markets, while it expects to release guidelines on the settlement price of derivatives on expiry days in about a week, Chairman Tuhin Kanta Pandey said on Saturday.
Addressing the second Capital Market Confluence 2026 organised by the Bombay Stock Exchange Brokers' Forum, Pandey said the AI framework would follow a tiered approach with clear accountability, data controls, kill switches and human oversight. It will also align with the International Organization of Securities Commissions' supervisory toolkit for AI to support an agile governance framework. "Technology cannot dilute accountability. Regulated entities remain responsible for AI outcomes, data quality, model governance and cyber resilience," Pandey said, stressing that human oversight must remain clear as technology reshapes market operations and supervision. On derivatives trading, Pandey said SEBI was examining comments received on a consultation paper addressing concerns regarding the settlement price of derivatives on expiry days, following a review of the Closing Auction Session. The regulator hopes to issue guidelines on the matter in about a week. He also said implementation of changes to bring tender offers, buybacks and offers for sale within the interoperability framework was targeted by the end of November 2026. These transactions currently require parallel clearing arrangements, increasing costs and compliance requirements. The proposed changes are expected to improve capital efficiency and lower compliance costs while preserving settlement safety. Pandey outlined a broader agenda to strengthen India's capital markets, including simpler and proportionate regulation, deeper cash markets, improved price discovery and easier access for overseas investors. SEBI has received more than 400 comments on its proposal for simpler digital onboarding of Persons Resident Outside India without requiring their physical presence. A circular on the matter is expected shortly, he said. India's capital market capitalisation stands at around Rs 472 lakh crore, with more than 15 crore unique investors. Mutual fund assets are around Rs 87 lakh crore, while outstanding corporate bonds stand at approximately Rs 61 lakh crore, according to Pandey. He said India's next phase of market development must focus on trust, resilience and efficiency rather than scale alone. SEBI is also strengthening business continuity, disaster recovery, cybersecurity safeguards and governance across market infrastructure institutions. Pandey said India's ambition should be to build capital markets that not only attract global investment but also set standards for other markets, with innovation matched by accountability and investor protection. (ANI)
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