Sebi Holds AI-Using Market Entities Accountable

The Securities and Exchange Board of India (Sebi) proposes to hold market infrastructure institutions and intermediaries accountable for AI use in operations or client services. This includes data privacy and security. The proposal mandates thorough responsibility for outcomes, regardless of AI usage extent.

The Securities and Exchange Board of India (Sebi) has put forth a proposal to hold market infrastructure entities and intermediaries accountable for any consequences arising from the use of artificial intelligence (AI) in their operations. This initiative underscores the importance of safeguarding data privacy and security, especially concerning sensitive investor information.

Sebi's consultation paper highlights the increased use of AI in investor services and compliance operations, recognizing the benefits such as enhanced efficiency and risk management. However, the regulator stresses the importance of investor protection amidst the growing adoption of AI technologies by stock brokers, depositories, and mutual funds.

Sebi's proposed guidelines mandate that all regulated entities using AI must ensure responsibility for their AI usage outcomes. This includes ensuring the privacy, security, and integrity of stakeholders' data. Public comments on the proposal are invited by November 28.

(With inputs from agencies.)