The Securities Exchange Board of India (“SEBI”), in exercise of powers conferred under Section 4, Section 8(A) and Section 31 of the Securities Contracts (Regulation) Act, 1956, read with Section 11 and Section 30 of the Securities and Exchange Board of India Act, 1992, vide Notification No. F. No. SEBI/LAD-NRO/GN/2025/227[1], dated February 06, 2025, issued the Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) (Amendment) Regulations, 2025 (“Amended Regulations”). The Amended Regulations, which modify the previously issued Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2018, shall come into force immediately.
Through the Amended Regulations, a new regulation, 39(B), has been inserted to delineate the responsibility of recognized stock exchanges and clearing corporations using Artificial Intelligence (“AI”) or Machine Learning (“ML”) tools, whether developed internally or procured from third-party providers. These entities shall solely be responsible for:
- Ensuring the privacy, security, and integrity of investor and stakeholder data.
- Managing the outputs of AI/ ML tools.
- Compliance with applicable 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 to investors/ stakeholders or 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-contracts-regulation-stock-exchanges-and-clearing-corporations-amendment-regulations-2025_91807.html