Securities and Exchange Board of India (SEBI) Chairman Tuhin Kanta Pandey announced plans to release an initial advisory on risks associated with next-generation artificial intelligence models and AI-led vulnerability-scanning tools. At a conference in Mumbai, Pandey highlighted the impact of rapid AI advancements on capital markets, emphasizing the dual nature of AI systems in identifying weaknesses and potentially exploiting vulnerabilities. He stressed the challenges faced by regulators and market participants in managing technology-related risks, particularly in the interconnected modern market landscape.
Pandey underscored the importance of addressing technology risks at a broader level beyond individual entities, emphasizing the potential market-wide implications of a single weak link. Regulated entities were urged to enhance cyber resilience, implement continuous monitoring mechanisms, and expedite remedial actions upon identifying vulnerabilities. The upcoming advisory, part of SEBI’s framework for responsible innovation, aims to guide market players on navigating emerging technology risks without hindering technological progress.
SEBI’s proactive approach involves issuing the advisory as an early supervisory signal, fostering ongoing dialogue with market participants and stakeholders to address evolving technology risks. While the timeline and scope of the advisory remain unspecified, SEBI’s commitment to risk-based regulation and fostering innovation in financial markets has been evident through recent initiatives promoting digital onboarding, faster settlement processes, and innovative financial products.
