Sebi Plans SME Reset, AI Accountability Rules
The regulator is reviewing SME IPO rules and will hold firms responsible for the AI tools they use.
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Image Credit- Chetan Jha/ MIT Sloan Management Review India
The Securities and Exchange Board of India (Sebi) is reviewing rules for SME public offerings and preparing guidelines that will hold financial firms responsible for the artificial intelligence systems they use, including tools supplied by outside vendors.
Chairman Tuhin Kanta Pandey said the SME review would seek to make fundraising easier for genuine companies without weakening investor protection.
Market-making requirements were adding to IPO costs for smaller businesses, he said at Ficci’s 23rd Annual Capital Markets Conference in Mumbai on Wednesday, August 19.
“A comprehensive review is underway,” Pandey said, according to Reuters.
Under the forthcoming AI guidelines, Sebi-regulated entities will remain responsible for systems developed internally or bought from third parties. That responsibility will cover the privacy, security and integrity of investor data, as well as the systems’ outputs.
The guidelines will use a tiered approach and require data controls, human oversight and kill switches that allow problematic systems to be stopped.
“The question is not whether markets will use AI. The question is how we use it responsibly, while preserving trust,” Pandey said.
Sebi already uses AI through Project SUDARSAN and R(AI)DAR to identify suspicious financial promotions and potentially misleading advertisements.
The regulator is also reviewing settlement, listing-obligation and delisting rules. It is considering greater flexibility for REITs and InvITs to invest in under-construction projects within prescribed limits.
