India’s securities regulator is evaluating a domestically developed artificial intelligence model for capital markets, citing concerns over the confidentiality and availability of frontier AI models, said the Securities and Exchange Board of India (SEBI) Chairman Tuhin Kanta Pandey at the Business Standard BFSI Insight Summit 2026.
Domestic AI Infrastructure Under Consideration
According to Pandey, a locally built and governed model could serve as digital public infrastructure for India’s securities ecosystem, supporting market surveillance, risk assessment and supervisory analysis. The proposal remains exploratory; SEBI has not announced a development budget, deployment timetable, or technical specifications.
Pandey highlighted AI’s potential to identify unusual market patterns, while stressing that automation cannot replace institutional responsibility. “Using AI will require reliable data, effective model oversight, and clarity about who is accountable for decisions,” he said.
Governance Framework and Technology Roadmap
SEBI is working to implement the International Organization of Securities Commissions (IOSCO) supervisory toolkit for AI use. The initiative aims to improve risk management and establish adaptable governance standards for technology deployed across securities markets.
Separately, the regulator is preparing a technology roadmap for market infrastructure institutions (MIIs), covering short-term priorities and long-term development. These institutions support market functions, making operational resilience and third-party dependencies supervisory concerns.
Cybersecurity Rules Could Cover Subsidiaries
SEBI has proposed extending the information technology and cybersecurity requirements applicable to MIIs to their subsidiaries. The proposed expansion reflects interconnectedness among trading infrastructure, technology vendors and supporting entities.
Pandey also announced a training initiative involving Rashtriya Raksha University (RRU) and the National Institute of Securities Markets (NISM). The program will train security operations centre engineers to analyse alerts using AI, automate responses and strengthen incident-handling capabilities. No participant numbers or training launch date were specified.
Final Thoughts
SEBI’s proposals signal a shift toward domestically governed AI capabilities alongside tighter technology oversight. The central challenge will be balancing faster surveillance and operational efficiency with secure data handling, transparent accountability, and resilient market infrastructure.
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