SEBI Says AI Guidelines for India's Capital Markets Are Coming, Built Around Accountability, Kill Switches and Human Oversight
SEBI chairman Tuhin Kanta Pandey said the regulator will shortly issue guidelines for the responsible use of AI and machine learning in India's capital markets, following a tiered approach with clear accountability, data controls, kill switches and human oversight, aligned with IOSCO's supervisory toolkit for AI, ETCIO reported on Oct. 12. 'Technology cannot dilute accountability,' he said. No date was given, and the final text is not yet public; SEBI consulted on a draft in June 2025.
India's markets regulator says AI in capital markets will come with kill switches and clear accountability, if its chairman's description holds. Securities and Exchange Board of India (SEBI) chairman Tuhin Kanta Pandey said on October 10 that the regulator will "shortly" issue guidelines for the responsible use of artificial intelligence and machine learning in capital markets, ETCIO reported on October 12. He gave no date for the final text.
Pandey was speaking at the second Capital Market Confluence 2026, organised by the Bombay Stock Exchange Brokers' Forum.
What he described
According to ETCIO, Pandey said the AI framework would:
- follow a tiered approach;
- set clear accountability, with data controls, kill switches and human oversight;
- align with the International Organization of Securities Commissions (IOSCO)' supervisory toolkit for AI, to support what he called an agile governance framework.
"Technology cannot dilute accountability. Regulated entities remain responsible for AI outcomes, data quality, model governance and cyber resilience," Pandey said, stressing that human oversight must remain clear as technology reshapes market operations and supervision.
The report does not say what the tiers would be based on, which entities fall in which tier, when a kill switch would have to be used, or how the final text will differ from the draft SEBI put out for consultation in June 2025.
Where it sits
SEBI has consulted on this before. In June 2025 it published a consultation paper proposing guidelines for responsible AI/ML use in securities markets, covering model governance, disclosure to investors, testing, fairness and bias, and data privacy and cybersecurity, with a lighter-touch regime for uses that do not directly affect clients, such as internal compliance and surveillance. Comments were due by July 11, 2025. Pandey did not say how the final guidelines would differ from that draft.
The SEBI remarks follow IT Minister Ashwini Vaishnaw's statement on October 8 that India should publish a consultation paper on AI regulation in about a month. That is a cross-economy paper to consult on; SEBI's would be guidelines for the entities it regulates. In the same speech, Pandey said SEBI expects to issue guidelines on the settlement price of derivatives on expiry days in about a week, a separate matter from AI.
Limits
- Pandey's description comes from one report, ETCIO's; a SEBI press release or speech text was not checked.
- The final text has not been published; the tiers, scope and obligations are known only from Pandey's description and SEBI's June 2025 consultation draft. "Shortly" is the chairman's word; no date was given.
- Pandey spoke on Saturday, October 10, according to ETCIO, which carried ANI's report.
Sources
- ETCIO: SEBI to release AI guidelines for capital markets, enhancing accountability and human oversight (October 12, 2026)
- SEBI: Consultation Paper on guidelines for responsible usage of AI/ML in Indian Securities Markets (June 20, 2025)
- Times of AI: India Promises an AI Regulation Consultation Paper Within a Month