India’s markets regulator is exploring the development of a domestically governed artificial intelligence model specifically for the securities market, while also moving to adopt a global AI supervisory framework and strengthen cybersecurity oversight across market institutions.
Securities and Exchange Board of India Chairman Tuhin Kanta Pandey said the proposed model could be built and governed within India as a form of digital public infrastructure. The regulator is examining the idea amid concerns over the confidentiality and availability of frontier AI models used in sensitive financial-market environments.
Pandey outlined the plans at the Business Standard BFSI Insight Summit 2026 in Mumbai on October 28. SEBI’s official website lists his address, titled “Financing India’s growth”, among the regulator’s speeches delivered that day.
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Domestic AI Model Could Support Market Supervision
SEBI is considering a securities-market-specific AI model that would be developed and governed domestically rather than relying entirely on externally controlled frontier systems.
Pandey said technology is changing both how investors access financial markets and how institutions manage them. AI-enabled systems could improve services, risk assessment and regulatory supervision, but their use would require reliable data, effective oversight of models and clear accountability for decisions.
The regulator is also working to implement the International Organization of Securities Commissions’ supervisory toolkit for artificial intelligence in India’s securities market. Pandey said the framework would support risk management and help create a more agile governance structure for the use of AI.
The International Organization of Securities Commissions brings together securities and futures market regulators and has been examining the risks created by the increasing use of artificial intelligence in financial markets.
SEBI’s proposed domestic model could therefore form part of a wider effort to use AI in areas such as supervision and risk assessment while maintaining greater control over the technology and the data used by financial-market institutions.
The plan is broader than an AI system designed purely for securities trading. The regulator’s remarks indicate that the proposed model could support the functioning and supervision of the securities market more generally, including applications related to market services and regulatory oversight.
AI Push Extends to Cybersecurity and Market Infrastructure
SEBI is also looking at the use of artificial intelligence in cybersecurity operations.
The regulator is planning a training programme with the National Institute of Securities Markets and Rashtriya Raksha University to help engineers managing security operations centres use AI tools to analyse alerts and develop automated responses.
SEBI has separately proposed extending the information technology and cybersecurity framework currently applicable to market infrastructure institutions to their subsidiaries. The move would widen the scope of cybersecurity requirements across entities operating within the securities-market ecosystem.
The initiatives reflect a broader approach in which AI is being considered not only as a tool for market services but also for regulatory supervision, risk management and cyber defence.
Pandey stressed that wider use of AI would have to be accompanied by dependable data, proper model governance and accountability. Those safeguards are particularly important in financial markets, where automated systems may influence risk assessments, institutional decisions and responses to security threats.
The domestic governance element is also significant because SEBI has specifically pointed to concerns surrounding the confidentiality and availability of frontier AI models. A locally governed model could give the securities-market ecosystem greater control over how sensitive information is handled and how AI systems are deployed.
SEBI Reviews Foreign Investor Rules and SME Framework
Alongside its AI plans, SEBI is reviewing compliance requirements for foreign portfolio investors and intends to issue a consultation paper seeking views on bringing some Indian rules closer to global standards.
Pandey said India had already streamlined market access, eased digital onboarding and simplified procedures for overseas investors, but acknowledged that some domestic compliance requirements remained more onerous than those in other major markets.
He said India would require both domestic and foreign capital to support its growth ambitions, with international participation capable of expanding the available pool of capital and bringing additional expertise.
SEBI is also examining changes to the framework governing small and medium enterprise listings. Proposals under consideration include determining issuer eligibility on the basis of post-issue market capitalisation and requiring larger issuers to follow Indian Accounting Standards.
The regulator has further proposed changes to its Listing Obligations and Disclosure Requirements regulations to strengthen monitoring of how funds raised through securities issues are used. The proposals include requiring monitoring agencies to submit their reports directly to stock exchanges within a prescribed period.
Pandey said the next stage of India’s capital-market development would require deeper equity and corporate bond markets, along with stronger REIT and InvIT markets, a wider issuer base, improved secondary-market liquidity and greater participation from institutional investors.
Taken together, the measures place technology governance alongside broader market reforms as SEBI considers how artificial intelligence can be used in India’s securities ecosystem without weakening accountability, cybersecurity or regulatory control.
About the author — Suvedita Nath is a science student with a growing interest in cybercrime and digital safety. She writes on online activity, cyber threats, and technology-driven risks. Her work focuses on clarity, accuracy, and public awareness
