The Securities and Exchange Board of India (SEBI) has proposed that regulated market infrastructure institutions and intermediaries that use artificial intelligence and machine learning tools in their securities market and client servicing activities will be held “solely responsible” for the privacy and integrity of the data of investors maintained by them in a fiduciary capacity.
SEBI made this proposal in a consultation paper issued Wednesday. The market regulator has invited comments from the public by November 28.
SEBI said securities market operations prompted by artificial intelligence may provide increased efficiency, timely reporting and other benefits, and it may be imperative to permit intermediaries to use such tools, but “it is equally important to ensure the protection of investors.”
SEBI added that there is “a pressing need to assign responsibility on market infrastructure institutions, intermediaries and persons regulated by SEBI that use AI/ML (artificial intelligence or machine learning) in the conduct of their business and related activities… to bring in more seriousness to such users while deploying AI/ML tools and at the same time ensure investors’ protection.”
In the consultation paper, SEBI specified the amendments that it would like to make in three different regulations — on stock exchanges and clearing corporations, depositories and participants, and intermediaries.
