Sebi Chairman Announces AI Tool For Risk-Based Supervision Of Market Intermediaries

The Securities and Exchange Board of India (SEBI) has revealed plans to deploy an AI-powered tool for risk based supervision of market intermediaries. SEBI Chairman emphasized that the regulator is leveraging artificial intelligence and machine learning to improve monitoring efficiency, safeguard investor interests, and strengthen market integrity.

Key Highlights

• SEBI is building an AI tool to enhance risk based supervision of intermediaries such as brokers, mutual funds, and depositories.
• The tool will help detect irregularities, monitor compliance, and identify potential risks in real time.
• The initiative aligns with SEBI’s broader framework for responsible usage of AI and ML in securities markets.
• Guiding principles have been proposed to ensure ethical and transparent deployment of AI tools.
• The regulator aims to balance innovation with investor protection, ensuring technology adoption does not compromise governance.
• The AI system is expected to reduce systemic risks and improve regulatory efficiency.
• Market participants will be required to adopt reasonable procedures and control systems for AI usage.

Conclusion
SEBI’s move to integrate AI into supervision reflects its proactive approach to modernizing regulatory oversight. By combining technology with governance, the regulator seeks to strengthen investor confidence and ensure India’s capital markets remain resilient and transparent.

Sources: Economic Times, SEBI Official Circular, IndiaCorpLaw