NewKerala.com

SEBI to Issue Advisory on Risks from Next-Gen AI Tools in Capital Markets

SEBI Chairman Tuhin Kanta Pandey announced the regulator will issue an advisory on risks from next-gen AI tools. He highlighted that AI systems can exploit vulnerabilities at speed and scale, making risk management more difficult. The advisory will be part of SEBI's framework for responsible innovation, not a restriction on technology. Pandey urged market participants to strengthen cyber resilience and implement continuous monitoring.

Key Points: SEBI Advisory on AI Tool Risks in Markets

  • SEBI to issue initial advisory on AI risks
  • AI tools create systemic vulnerabilities in capital markets
  • Single weak link can pose wider market risks
  • Advisory part of responsible innovation framework
2 min read

SEBI mulls advisory on risks from next gen AI tools

SEBI Chairman Tuhin Kanta Pandey announces a forthcoming advisory on risks from next-gen AI and vulnerability-scanning tools in capital markets.

"While these tools can help identify weaknesses faster, they can also exploit vulnerabilities at speed and scale. - Tuhin Kanta Pandey"

Mumbai, May 4

Securities and Exchange Board of India Chairman Tuhin Kanta Pandey said on Monday that the market regulator will shortly issue an initial advisory on risks from next‑generation artificial intelligence models and AI‑led vulnerability‑scanning tools.

Speaking at the IMC Chamber of Commerce and Industry Capital Markets Conference here, Pandey said rapid technological advances in AI were reshaping capital markets by improving efficiency while creating new systemic vulnerabilities.

Pandey warned about increasing instances of sophisticated AI systems used to scan financial infrastructure for weaknesses. "While these tools can help identify weaknesses faster, they can also exploit vulnerabilities at speed and scale," he said, adding that the risk management has become more difficult for regulators and market participants.

SEBI Chairman highlighted that the tightly connected nature of modern markets has magnified the threat.

He said technology-related risks should not be treated only at the individual‑entity level because a single weak link can pose wider market risks.

Regulated entities have been endowed with the responsibility to manage these risks, he said, urging them to proactively strengthen cyber resilience, implement continuous monitoring systems, and ensure faster remediation when vulnerabilities are identified.

Pandy stressed on preparedness and response, adding that the advisory will sit within SEBI's broader framework of responsible innovation rather than as a restriction on technology adoption.

SEBI will place the document as an early supervisory signal and remain in active engagement with market participants and stakeholders on emerging technology risks.

The regulator has neither specified a timeline for the advisory, nor indicated if it will be entity-specific or sector-wide.

SEBI's broader push for optimum and risk-based regulation has recently gained attention and the regulator maintained that innovation had played a key role in deepening markets through digital onboarding, faster settlement cycles and new financial products.

- IANS

Share this article:

Reader Comments

S
Sarah B
As someone working in fintech, I think this is overdue. AI vulnerability scanning is already being used by bad actors globally—why should India be immune? The fact that SEBI is calling it an 'advisory' instead of a regulation shows they're still figuring things out. We need faster action, not more committees.
P
Priya S
It's funny how SEBI talks about 'responsible innovation' but small investors like my father (who still goes to a broker) have no idea about AI risks. The real problem is financial literacy, not just technology. Teach people to spot manipulation, and AI threats become less scary. Still, good first step.
M
Michael C
I appreciate the caution, but let's not pretend AI is the enemy. The same tools that scan for vulnerabilities can protect us. SEBI's advisory should focus on ethical AI deployment and transparency, not fear-mongering. India's markets are already resilient—we just need smart regulation, not panic. 🇮🇳
V
Vikram M
Typical bureaucratic move: talk about risks but no timeline. Meanwhile, foreign funds use advanced AI daily while our regulators are still 'watching'. We need concrete guidelines for AI in trading—like mandatory disclosure when AI is used to make investment decisions. Otherwise this is just hot air.
E
Emma D
As an expat working in Mumbai's financial district, I've seen how Indian markets have leapfrogged with digital onboarding and faster settlements. The AI risk is real, but SEBI's approach of 'active engagement' gives me confidence. Let's hope they consult with global experts too—cyber threats don't respect borders.

We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.

Leave a Comment

Minimum 50 characters 0/50