Overview
- The consultation paper outlines five guiding principles covering model governance, investor disclosures, testing protocols, bias mitigation and data privacy.
- A Sebi-appointed working group drafted the framework after reviewing existing domestic and international AI/ML guidelines.
- Market participants will need dedicated teams to audit algorithms, retain model documentation for at least five years and maintain fallback plans for system failures.
- The draft applies lighter oversight to internal analytics but requires stricter scrutiny and clear disclosures for AI systems that directly impact investors.
- Sebi plans to finalise the framework later this year, making India one of the first major emerging markets to regulate AI/ML in capital markets.