Sebi proposes guiding principles for responsible use of AI, ML in securities markets

The Securities and Exchange Board of India (SEBI) has outlined its guiding principles for the responsible use of Artificial Intelligence (AI) and Machine Learning (ML) in the securities markets. The regulator acknowledges the potential of these technologies to improve market efficiency and investor services, but it is also cautious about the associated risks. The guiding principles emphasize the need for fairness, transparency, and accountability in the use of AI/ML algorithms. SEBI has stressed that market intermediaries using these technologies must have robust governance and oversight mechanisms in place. They must ensure that the algorithms are not biased, do not lead to market manipulation, and that their functioning can be explained. The aim is to create a framework that encourages innovation while safeguarding market integrity and protecting investors from the potential downsides of these advanced technologies.