MUMBAI, 28 October 2026 — India's markets regulator is weighing a domestically governed artificial intelligence model built specifically for the securities market, its chairman said on Wednesday, 28 October 2026, as the country moves to harness AI for market supervision while keeping control of the technology at home. The Securities and Exchange Board of India (SEBI) is also putting into practice a global supervisory toolkit for AI, chairman Tuhin Kanta Pandey told a summit in Mumbai, according to Reuters.
Illustration: The Mumbai financial district skyline with rising stock market charts in the foreground.
What Happened
Pandey said SEBI is implementing the International Organization of Securities Commissions' (IOSCO) supervisory toolkit to strengthen risk management and develop what he described as an agile governance framework for the use of AI, Reuters reported. Alongside that work, the regulator is exploring a securities-market-specific AI model that could be built and governed domestically as a form of digital public infrastructure.
The distinction matters. Rather than simply buying or licensing a general-purpose AI system from abroad, SEBI is considering a model designed for the particular demands of securities markets — market surveillance, risk assessment, investor services and supervision — and governed within India. Pandey said AI-enabled tools could improve services, risk assessment and supervision, but added that their use requires reliable data, effective oversight of models and clear accountability for decisions, according to Reuters.
Pandey also used the Mumbai summit to address a second front of market reform. SEBI is reviewing compliance requirements for foreign investors and will issue a consultation paper seeking views on aligning them with global standards, he said. While India has streamlined market access, eased digital onboarding and simplified procedures for overseas investors, some domestic compliance requirements remain more onerous than those in other major jurisdictions, he acknowledged.
Background
SEBI regulates one of the world's largest and fastest-growing equity markets. India has seen a surge in retail investor participation in recent years, alongside deepening foreign investment, and its exchanges now rank among the busiest on the planet by number of trades. That scale makes market supervision a data problem as much as a legal one: millions of orders a day must be monitored for manipulation, insider trading and systemic risk.
It is also why regulators worldwide are racing to write rules for AI in finance. IOSCO, the global association of securities regulators, has developed a supervisory toolkit intended to help its members manage the risks of AI — from models that behave unpredictably to the concentration risk of many firms relying on the same few systems. SEBI's adoption of that toolkit places India inside the emerging global consensus, while its domestically governed model idea reflects a distinctly Indian instinct: building public digital infrastructure, from payments to identity, that the country controls itself.
Illustration: Analysts monitoring market data screens in a financial regulator's control room.
The foreign-investor angle is equally significant. "India will need both domestic and foreign capital to support its growth ambitions," Pandey said, according to Reuters. "International participation can widen the pool of capital and bring expertise." Easing compliance frictions for overseas investors is therefore not a side issue: it is part of the same strategy of making Indian markets deeper, more liquid and more attractive to global money.
None of this is happening in a vacuum. AI tools are already spreading through the financial industry — banks, brokers and asset managers use them to analyse evidence, assess risk, draft documents and serve clients — and regulators face the same question in every jurisdiction: how to capture the efficiency gains without surrendering oversight to systems nobody fully understands. SEBI's answer, as sketched by Pandey, is to govern the models themselves, domestically, rather than merely policing their outputs.
Why It Matters
The proposal matters first for Indian investors. A market-specific AI model, governed as public infrastructure, could in principle improve surveillance of manipulation and fraud, speed up risk assessment, and make supervision more consistent across a market that now serves tens of millions of retail participants. If it works, it could make Indian markets fairer and safer without depending on foreign technology providers.
It matters second as a model for other regulators. Most securities watchdogs are still at the stage of issuing guidance about AI; few have proposed building their own governed model for the market they oversee. If SEBI follows through, its experiment will be watched closely by counterparts in other emerging markets that share India's twin goals: attracting global capital while retaining sovereign control over critical technology.
Third, the foreign-investor review matters for capital flows. India has spent years simplifying access for overseas investors, and Pandey's acknowledgement that some requirements remain more onerous than elsewhere signals further liberalisation ahead. For global funds weighing allocations to India, the consultation paper SEBI promises will be a document worth reading closely.
Finally, the announcement is a reminder of how quickly AI governance has moved from abstraction to institution-building. The debate is no longer only about what AI might do to markets; it is about who builds the models, who governs them, and on whose infrastructure they run. SEBI's answer — build it at home, govern it as public infrastructure — is one of the clearest statements of that shift yet from a major regulator.
What Happens Next
The most concrete next step is the consultation paper on foreign-investor compliance requirements, which Pandey said SEBI will issue to seek views on aligning them with global standards. Responses to that paper will shape how far and how fast India eases access for overseas investors.
Illustration: An artificial intelligence robot hand touching a glowing stock chart hologram.
On the AI model itself, the key questions are still open: what exactly the model would do first, how it would be built and funded, and what "governed domestically" means in practice for data, oversight and accountability. Pandey's remarks framed the idea as exploration rather than a finished plan, so observers should expect further detail — including, potentially, pilot projects — before any system goes live.
What is already clear is the direction of travel. SEBI is implementing the IOSCO toolkit now, and its chairman has publicly tied India's market ambitions to both domestic and foreign capital. Whether the homegrown AI model becomes the centrepiece of that strategy or one experiment among many, the regulator has signalled that AI in Indian markets will be governed deliberately — and, as far as possible, on India's own terms.
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Frequently Asked Questions
What is SEBI considering building?
A securities-market-specific artificial intelligence model that could be built and governed domestically in India as a form of digital public infrastructure, according to SEBI chairman Tuhin Kanta Pandey.
What is the IOSCO supervisory toolkit?
It is a toolkit from the International Organization of Securities Commissions designed to help securities regulators strengthen risk management and develop an agile governance framework for the use of AI. SEBI is implementing it, Pandey said.
Why does SEBI want a domestically governed model?
Pandey said AI tools can improve services, risk assessment and supervision, but their use requires reliable data, effective oversight of models and clear accountability for decisions — conditions a domestically governed model is intended to help meet.
What did Pandey say about foreign investors?
SEBI is reviewing compliance requirements for foreign investors and will issue a consultation paper on aligning them with global standards. Pandey said India needs both domestic and foreign capital to support its growth ambitions.
Is the AI model already built?
No. Pandey described SEBI as exploring the idea, not launching a finished system. Details on scope, funding and governance are still to come.
Sources
- Reuters, "India markets regulator weighs domestic AI model for securities trading, chairman says," 28 October 2026.
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