The Securities Exchange Board of India (“SEBI”), in exercise of powers conferred under Section 30 of the Securities and Exchange Board of India Act, 1992 read with Section 25 of the Depositories Act, 1996, vide Notification No. F. No. SEBI/LAD-NRO/GN/2025/225[1], dated February 06, 2025, issued the Securities and Exchange Board of India (Depositories And Participants) (Amendment) Regulations, 2025 (“Amended Regulations”). The Amended Regulations, which modify the previously issued Securities and Exchange Board of India (Depositories and Participants) Regulations, 2018, shall come into force immediately.
The Amended Regulations insert a provision for the interest on non-payment, belated payment or short payment of annual fee and annual charge. In the event, due to the default of the depository, any fee required to be paid to the Board remains unpaid, is paid late, or is underpaid, the depository shall, in addition to any other actions that may be initiated under the applicable Act, rules, or regulations, be liable to pay interest at the rate of 15% (fifteen percent) per annum on the outstanding amount for each month of delay or part thereof, until the full payment is made to the Board.
Additionally, through the Amended Regulations, a new regulation, 82(AA), has been inserted to delineate the responsibility of all depositories regulated by SEBI and using Artificial Intelligence (“AI”) or Machine Learning (“ML”) tools, whether developed internally or procured from third-party providers. These depositories shall solely be responsible for:
- Protection of investors’ data, including maintenance of privacy, security, and integrity throughout the processes.
- Accountability for the output of AI/ ML tools.
- Full compliance with relevant laws.
For clarity, “AI and ML tools and techniques” shall refer to any application, software program, executable system, or a combination thereof, used by a recognized stock exchange or clearing corporation. These tools may be offered by the depositories may be used internally for trading, settlement, compliance, or other business activities, and may be part of the products offered to the public or used for compliance and management purposes.
[1]https://www.sebi.gov.in/legal/regulations/feb-2025/securities-and-exchange-board-of-india-depositories-and-participants-amendment-regulations-2025_91810.html