SEBI to issue AI guidelines for capital markets, eye on investor protection
Synopsis
SEBI is set to roll out India's first formal AI-usage framework for capital markets, requiring human oversight of critical decisions and mandatory disclosures from regulated entities. With quantum computing risks flagged for the 2032–35 window and a new cyber-incident reporting template already live, the regulator is signalling it intends to stay ahead of the technology curve — not just react to it.
Key Takeaways
SEBI will soon issue guidelines on the responsible use of AI in capital markets, with mandatory disclosures and a 'human-in-the-loop' requirement.
A consultation paper proposing AI and ML principles was released in June 2025 ; the upcoming guidelines are the follow-through.
SEBI introduced a cyber-incident response mechanism in May 2026 , aligned with the Financial Stability Board's FIRE reporting template .
The regulator is auditing cryptographic systems to prepare for quantum computing risks expected to peak around 2032–35 .
SEBI's own 'Sudarshan' AI supervision tool is being presented at international regulatory forums.
A working group has been formed to make the Innovators Growth Platform (IGP) more accessible to deep-tech and biotech startups.
Markets regulator Securities and Exchange Board of India (SEBI) will soon release detailed guidelines governing the responsible use of Artificial Intelligence (AI) in capital markets, with a focus on investor protection, accountability, and human oversight, Chairman Tuhin Kanta Pandey announced on 15 November 2026. The guidelines are set to establish a structured framework for how market participants adopt and deploy AI — a first of its kind from India's securities regulator.
What the Guidelines Will Cover
The proposed framework will mandate mandatory disclosures by regulated entities, establish clear lines of accountability, and require a 'human-in-the-loop' approach to ensure that all critical decisions remain subject to human supervision. Pandey said the regulator was working to ensure that technological innovation does not compromise market integrity, investor safety, or financial stability.
This follows a consultation paper SEBI issued in June 2025, which proposed guiding principles for the responsible use of AI and Machine Learning (ML) applications in the securities market. That framework was designed to maximise the benefits of emerging technologies while minimising associated risks — the upcoming guidelines represent the operational follow-through.
Cybersecurity and the FIRE Reporting Framework
Pandey highlighted the growing cybersecurity challenges facing India's financial sector, noting that SEBI has been continuously strengthening its cyber defences to address threats including cyberattacks on financial institutions, cryptocurrency platform breaches, and digital frauds involving social media influencers.
In May 2026, SEBI introduced a structured incident response mechanism aligned with the Financial Stability Board's FIRE reporting template, aimed at improving the reporting and management of cybersecurity incidents across regulated entities.
Quantum Computing: Preparing for a 2032–35 Threat Window
On quantum computing, the SEBI Chairman said the regulator is currently conducting an inventory of cryptographic systems to identify areas of potential vulnerability. He noted that markets globally are preparing for the security challenges quantum computing poses, with risks expected to become significantly more pronounced in the 2032–35 window. Pandey stressed that preparations must be completed well in advance of that timeline.
SEBI's 'Sudarshan' AI Tool and Startup Listings
Pandey also highlighted SEBI's own AI capabilities, citing its 'Sudarshan' regulatory supervision tool, which is being showcased at international regulatory forums. The regulator is simultaneously strengthening its AI toolkit through international initiatives.
Separately, Pandey said SEBI has constituted a working group to examine ways to make the Innovators Growth Platform (IGP) more attractive, particularly for deep-tech and biotechnology companies, signalling a broader push to bring high-growth startups into the listed market.
The announcements were made at the inauguration of SEBI's pavilion at the 45th India International Trade Fair (IITF) 2026, organised by the India Trade Promotion Organisation (ITPO) in New Delhi. With the final guidelines still to be issued, market participants and technology vendors will be watching closely for the disclosure and accountability norms that follow.
Point of View
Or become checkbox compliance? The June 2025 consultation paper drew no public dissent of note, which either means the framework is well-calibrated or that market participants are waiting to see the fine print before pushing back. On quantum computing, flagging a 2032–35 risk window in 2026 is prudent, but India's financial infrastructure has historically been slow to retrofit cryptography — SEBI will need to move faster than its own timeline suggests.
NationPress
15 Nov 2026
Frequently Asked Questions
What are SEBI's upcoming AI guidelines for capital markets?
SEBI is preparing detailed guidelines on the responsible use of Artificial Intelligence in capital markets, covering mandatory disclosures, accountability of regulated entities, and a 'human-in-the-loop' requirement so that critical decisions remain subject to human supervision. The guidelines build on a consultation paper issued in June 2025.
Why is SEBI introducing AI regulation for markets?
SEBI Chairman Tuhin Kanta Pandey stated that the regulator wants to ensure technological innovation does not compromise market integrity, investor safety, or financial stability. The rapid adoption of AI by brokers, asset managers, and trading platforms has created accountability gaps that formal guidelines are intended to close.
What is SEBI's 'Sudarshan' tool?
'Sudarshan' is SEBI's internal AI-powered regulatory supervision tool, which is being showcased at international regulatory forums. It is part of the regulator's broader effort to use artificial intelligence for market surveillance and oversight.
How is SEBI addressing quantum computing risks?
SEBI is conducting an inventory of cryptographic systems across its regulated ecosystem to identify vulnerabilities. The regulator has flagged that quantum computing risks are expected to become significant around 2032–35 and has stressed that preparations must be completed well in advance.
What is the Innovators Growth Platform (IGP) and what changes are being considered?
The Innovators Growth Platform is SEBI's listing framework designed for high-growth startups. SEBI has constituted a working group to examine ways to make the IGP more attractive, with a particular focus on deep-tech and biotechnology companies that have so far found the platform's requirements prohibitive.
