SEBI Introduces Provisions in Relation to Usage of Artificial Intelligence and Machine Learning Tools by Market Infrastructure Institutions and Registered Intermediaries

Our undertakings for long-term impact are an organic extension of our purpose.

They are to employ our deep knowledge of the law beyond the business, the transaction, the deal. To use the opportunities and skills we possess, to reflect on the culture we’re creating. Individually and collectively, these are our efforts to help shape the thinking of our future generations, and arm them with strategies for true, sustainable growth.

Apr 28, 2025

SEBI Introduces Provisions in Relation to Usage of Artificial Intelligence and Machine Learning Tools by Market Infrastructure Institutions and Registered Intermediaries

The Securities and Exchange Board of India (‘SEBI’), by way of two separate Notifications dated February 6, 2025, has introduced amendments to the Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2018 and the Securities and Exchange Board of India (Intermediaries) Regulations, 2008 to assign liability resulting from usage of artificial intelligence and machine learning tools and techniques (‘AI and ML Tools’) by stock exchanges, clearing corporations and any intermediaries regulated by SEBI (‘Relevant Entities’). The Notifications provide that such entities will be solely responsible for:

i. privacy, security and integrity of investors’ and stakeholders’ data maintained by it;

ii. the output resulting from the usage of such tools and techniques; and

iii. compliance with applicable laws in force.

The Notifications define AI and ML Tools to include any application, software program, executable system or a combination thereof, offered by the Relevant Entities or used internally to, inter alia, facilitate investing, trading, disseminating investment strategies, or to carry its activities (including compliance activities) and which are portrayed as part of the products offered to the public or under usage for compliance, management or other business purposes.

DISCLAIMER

These are the views and opinions of the author(s) and do not necessarily reflect the views of the Firm. This article is intended for general information only and does not constitute legal or other advice and you acknowledge that there is no relationship (implied, legal or fiduciary) between you and the author/AZB. AZB does not claim that the article's content or information is accurate, correct or complete, and disclaims all liability for any loss or damage caused through error or omission.