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, vide Notification No. F. No. SEBI/LAD-NRO/GN/2025/226[1], dated February 06, 2025, issued the Securities and Exchange Board of India (Intermediaries) (Amendment) Regulations, 2025 (“Amended Regulations”). The Amended Regulations, which modify the previously issued Securities and Exchange Board of India (Intermediaries) Regulations, 2008, shall come into force immediately.
Through the Amended Regulations, a new regulation, 16(C), has been inserted to delineate the responsibility of all persons regulated by SEBI and using Artificial Intelligence (“AI”) or Machine Learning (“ML”) tools, whether developed internally or procured from third-party providers. These persons 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” refers to any application, software, or system used by a Board-regulated entity, either for investors/ stakeholders or internally, to facilitate trading, investing, disseminate advice, or meet compliance and business needs. Additionally, the term “persons regulated by the Board” shall have the same meaning as in Explanation 1 to Regulation 16A of the Securities and Exchange Board of India (Intermediaries) Regulations, 2008.
[1]https://www.sebi.gov.in/legal/regulations/feb-2025/securities-and-exchange-board-of-india-intermediaries-amendment-regulations-2025_91809.html