Sebi has proposed that a "regulatory lite" framework may be adopted for usage of AI/ML in the securities market 

Sebi on Friday proposed guiding principles for responsible usage of Artificial Intelligence (AI) and Machine Learning (ML) applications in securities markets to safeguard investors and market integrity.

Also, the regulator has proposed that a "regulatory lite" framework may be adopted for usage of AI/ML in the securities market for any purpose other than for business operations that may directly impact their customers.

The proposed "guiding principles are intended to optimise benefits and minimise potential risks associated with integration of AI/ML-based applications in securities markets to safeguard investor protection, market integrity, and financial stability," Sebi said in its consultation paper.

At present, AI/ML is being used by market participants mainly for advisory and support services, risk management, client identification and monitoring, surveillance, pattern recognition, internal compliance purposes and cyber security.

"While AI/ML has the potential to improve productivity, efficiency and outcome, it is also important to manage these systems responsibly as their usage creates or amplifies certain risks which could have an impact on the efficiency of financial markets and may result in adverse impact to investors," Sebi said.