Sebi plans AI guardrails for capital markets, focus on investor protection — Market Impact & AI Analysis

What Happened

Markets regulator Sebi will soon issue detailed guidelines for the responsible use of Artificial Intelligence (AI) in the capital markets, its chairman Tuhin Kanta Pandey said, emphasising the need to balance technological innovation with investor protection. The Sebi chief said the proposed guidelines would focus on establishing appropriate guardrails for AI use, including disclosures, accountability of regulated entities and a 'human-in-the-loop' approach to ensure that critical decisions are subject to human oversight. In June 2025, Sebi floated a consultation paper proposing guiding principles for responsible usage of Artificial Intelligence (AI)/ Machine Learning (ML) applications/models in securities markets. These guiding principles are intended to optimise benefits and minimise potential risks associated with the integration of AI/ML based applications in securities markets to safeguard investor protection, market integrity, and financial stability. Speaking at the ...