Securities and Exchange Board of India (SEBI) Chairman Tuhin Kanta Pandey announced that the market regulator will soon release guidelines for AI-driven trading, emphasizing that artificial intelligence brings both opportunities and increased cyber risks to the financial ecosystem.
Speaking with ANI at an event organized by the Association of Mutual Funds in India in Odisha, Pandey noted that SEBI is developing a framework to regulate the growing use of AI in trading activities. “We are actually going for guidelines on how AIs will operate in the future. AI presents an opportunity for automating processes, but with it comes significant cyber risks. We are now issuing an advisory on how regulated entities in the SEBI ecosystem can protect themselves from these enhanced risks,” he stated.
Pandey highlighted how AI is aiding financial organizations in automating processes and reaching a broader range of investors. However, he also cautioned that increased reliance on technology can expose vulnerabilities that threaten market integrity. “Everyone relies on software, and if cybersecurity is compromised—if vulnerabilities in the software are exploited—it could lead to substantial issues and successful cyberattacks, posing risks to market integrity,” he explained.
Additionally, the SEBI Chairman introduced “Project Jagrook,” an initiative aimed at enhancing investor awareness through an AI-enabled, multi-agency, multimedia campaign. He underscored the necessity for robust patch management and stronger verification systems to secure software, particularly applications implemented by third-party vendors.
Regarding foreign portfolio investor (FPI) outflows, Pandey characterized these movements as a normal part of the global investment cycle, suggesting that foreign investors continuously evaluate returns and macroeconomic conditions in various markets. “FPIs come and go based on their assessments of the relative situations among global jurisdictions. Various factors influence their decisions, such as returns in particular markets, which are often evaluated in dollars rather than rupees,” he stated.
Pandey also addressed the issue of unauthorized deposit schemes, reminding that state governments have legislative authority to combat illegal fundraising through laws like the Chit Fund Act and the Banning of Unauthorised Deposits Act. He called on asset management companies and local administrators to guide investors toward legitimate financial products such as mutual funds, Portfolio Management Services, and Alternative Investment Funds.
Published on May 18, 2026.
