The Securities and Exchange Board of India (Sebi) is exploring the possibility of developing a securities market-specific artificial intelligence (AI) model that could be built and governed domestically, Chairman Tuhin Kanta Pandey said at the Business Standard BFSI Insight Summit 2026, citing concerns over the confidentiality and availability of frontier AI models.
The proposed model could function as a form of digital public infrastructure for the securities market, Pandey said during his keynote address.
He said technology was changing how investors accessed markets and how institutions managed them, offering opportunities to improve services, risk assessment and supervision. AI-enabled tools could also help identify patterns that warrant closer examination.
However, he cautioned that greater adoption of AI would require stronger oversight and clear accountability.
“Using AI will require reliable data, effective model oversight, and clarity about who is accountable for decisions,” Pandey said.
He added that faster and more automated processes made sound institutional judgment even more important.
Sebi working on AI governance framework
Pandey said Sebi was working to implement the IOSCO supervisory toolkit for AI use in the Indian securities market.
The initiative would support risk management and the development of an agile AI governance framework, he said.
The regulator is also developing a technology roadmap for market infrastructure institutions (MIIs), which will outline a structured short-term and long-term technology vision for the securities market ecosystem.
Pandey said technological advancements had also increased dependencies across institutions and service providers, making cyber preparedness, business continuity and oversight of outsourced services essential for the functioning of financial markets.
Cybersecurity measures and AI training
To strengthen cybersecurity, Sebi has proposed extending the applicable information technology and cybersecurity framework for MIIs to their subsidiaries.
Pandey also announced plans for a training programme with RRU and NISM for engineers managing security operations centres.
The programme would equip participants to use AI tools and techniques to analyse alerts, develop automated responses and improve the effectiveness of security operations.
He said measures undertaken by Sebi and other financial sector regulators had strengthened cybersecurity and resilience across financial markets.
However, the rapidly evolving technology landscape required continued engagement across the ecosystem to identify emerging challenges and improve collective cyber resilience.
Pandey emphasised that while technology could improve efficiency and supervision, effective risk management and institutional oversight would remain essential as financial markets became increasingly complex.
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