SEBI Consultation Paper on Responsible AI/ML Use in Markets
Why in the news
With AI and ML spreading in trading, advisory and surveillance, SEBI issued a consultation paper to protect investors and ensure fairness and cybersecurity.
| Pillar | Proposal |
|---|---|
| Model governance | Accountability for building, validating, deploying models; independent oversight and decision records |
| Investor protection | Transparent robo-advisory type tools; disclose AI processes, limits and risks |
| Testing | Strict pre-deployment tests; back-testing, scenario analysis, outcome monitoring |
| Fairness and bias | Prevent algorithmic bias in profiling and strategies; ethical AI, inclusive datasets |
| Privacy and cybersecurity | Data protection under the Digital Personal Data Protection Act; cybersecurity standards |
Next steps
- The paper, “Guidelines for Responsible Usage of AI/ML” for the securities market, invites public and industry feedback.
Exam angle
- Number of pillars: five; data law cited: DPDP Act.