Will Sebi strengthen governance, risk framework amid rising AI, cyber risks?

Securities and Exchange Board of India (Sebi) aims to strengthen governance and risk management framework at a time when technology usage is growing, and there are growing concerns over new Artificial Intelligence (AI) models and it's cyber security impact on capital markets.

Technology is becoming a key enabler of its work from advanced analytics and digital forensics to real-time monitoring systems and AI-enabled platforms are enhancing both supervision and efficiency, said Sebi Chairman Tuhin Kanta Pandey. 

"We will strengthen governance and risk management frameworks and capabilities. It is also important to recognize that markets are not built by regulators alone. Industry participants must move beyond compliance to a deeper commitment to fairness, integrity and innovation," he said. 

Pandey reminded intermediaries that they are often the first point of trust for investors and he felt investors themselves must also remain aware and responsible in their participation.

Speaking at the market regulator's 38th foundation day, Pandey pointed that the global environment currently was unpredictable, but still Indian markets had remained resilient.

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"Geopolitical tensions, shifting trade dynamics and rapid technological changes are constantly testing systems, institutions and markets. Yet, what stands out is the resilience of our markets. That resilience reflects years of institution building, sound regulation and the strength of the frameworks we have put in place, " he said.

Pandey pointed that India now has over 5,900 listed companies and more than 140 million unique investors. Over the last decade, market capitalization has grown at around 15 per cent compounded annual growth rate and mutual fund assets have expanded at over 20 per cent annually.

The future of regulation will demand new skills, data analytics, technology and interdisciplinary thinking, according to Pandey. 

The regulator has also taken steps to further strengthen internal governance at Sebi following the high-level committee recommendations on conflict of interest and disclosures.

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Sebi will continue to invest in technology-led supervision and collaborate to bring innovations for market development such that capital formation contributes to faster economic growth, he said. 

"We will accelerate our drive to simplify and rationalize regulations for ease of doing business by all participants in a capital market," Pandey noted.

Finance Minister Nirmala Sitharaman was also present on the occasion and called upon Sebi as well as regulated entities to remain exceptionally vigilant amid rising cyber security risks.