SEBI AI/ML guidelines for capital markets

On August 19, 2026, at the 23rd Federation of Indian Chambers of Commerce & Industry Capital Markets Conference in Mumbai, SEBI Chairman Tuhin Kanta Pandey announced that the regulator will soon issue guidelines for the responsible use of artificial intelligence and machine learning in India's capital markets. The framework will adopt a tiered approach, requiring human oversight, data controls, and 'kill-switch' mechanisms to mitigate risks such as opacity, bias, cybersecurity, and data protection. Pandey emphasized that SEBI-regulated entities remain fully responsible for AI/ML tools they deploy, whether developed internally or procured from third parties. The announcement comes amid rapid expansion of India's capital markets, with equity issuances crossing Rs 4.5 lakh crore in FY25-26, including around Rs 1.9 lakh crore raised through 366 IPOs. Corporate bond issuances exceeded Rs 9 lakh crore in FY26, and market capitalisation stood at about 132% of GDP. SEBI also plans to explore new investment channels, including allowing client funds under the proposed Portfolio Managers framework to invest in foreign securities, and is reviewing securities lending, borrowing, and short-selling frameworks. The regulator is also examining an IT resilience index for market infrastructure institutions.