1 week ago

Sebi Plans SME Listing Overhaul, Tighter AI Accountability Rules

India’s market regulator, Sebi, wants to change how small companies list their shares.

Some investors have found it difficult to trade shares in small lots on the SME platform.

Sebi also said current rules for market makers and underwriting are not working well.

The regulator plans to publish a consultation paper before making these changes.

Sebi is also preparing rules for using artificial intelligence and machine learning in financial markets.

Companies regulated by Sebi would remain responsible for tools they build or buy from others.

They would have to protect investor data and check the results produced by these tools.

The proposed rules may require emergency shutoff systems and human supervision.

Key facts

SME framework review: Sebi plans a comprehensive reform proposal and consultation paper for the SME platform.
Trading issue: Odd lots have made it difficult for investors to trade on the SME platform.
Market making: Sebi said the market-making framework is not working properly and is adding costs for SMEs.
AI accountability: Every Sebi-regulated entity would remain responsible for AI or ML tools it uses, including third-party systems.
Data responsibility: The proposed responsibility covers investor-data privacy, security and integrity, as well as system outputs.
Planned safeguards: The guidelines are expected to include kill switches, humans in the loop, data controls and governance measures.
Existing technology initiatives: Sebi has deployed Project Sudarsan and R(AI)DAR to identify suspicious financial promotions and potentially misleading advertisements.

rediff.com · 1 week ago