The Securities and Exchange Board of India (Sebi) is preparing to introduce new guidelines for artificial intelligence (AI)-driven trading systems as concerns over cybersecurity risks continue to grow.
Sebi Chairman Tuhin Kanta Pandey said the regulator is working on an advisory to protect stock market systems and regulated entities from increasing threats linked to AI technology.
The announcement comes at a time when AI tools are becoming more powerful and widely used in financial markets.
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Why Sebi Is Concerned About AI Risks
According to Pandey, the growing use of AI in trading and financial systems has also increased the risk of cyberattacks.
He warned that if vulnerabilities are found in software systems, cyberattacks could happen very quickly and may seriously affect market stability and investor confidence.
Sebi recently issued an advisory after concerns emerged around AI-based vulnerability detection tools such as Anthropic’s “Mythos” model.
The regulator asked market participants to immediately update operating systems and install the latest security patches to reduce potential risks.
Globally, experts have raised concerns that advanced AI systems capable of identifying software weaknesses could also be misused by cybercriminals.
Sebi Also Focuses on Municipal Bonds
Apart from AI-related concerns, the Sebi chairman also highlighted the growing importance of municipal bonds in India.
He said municipal bonds could become a major source of funding for urban infrastructure projects, especially in developing states like Odisha.
Globally, municipal bonds are widely used by city authorities to raise money for projects such as:
Water supply systems
Sanitation projects
Public transport
Waste management
In India, the municipal bond market is still developing. So far, 22 urban local bodies have raised more than Rs 4,500 crore through such bonds.
Sebi has also proposed reforms to make fundraising easier and allow multiple urban bodies to raise funds together.
More Indians Are Investing in Markets
Pandey said investor participation in India’s stock markets has increased sharply in recent years.
India now has around 145 million unique investors, compared to just 38 million in FY19.
In Odisha alone, the number of market investors has grown more than ten times over the last decade.
However, Sebi noted that only 9.5% of Indian households currently invest in securities market products, despite awareness levels being much higher.
Sebi Encourages Long-Term Investing
The Sebi chairman also stressed the importance of disciplined and long-term investing, especially through mutual funds.
He said investors do not need a large amount to begin investing and can start a Systematic Investment Plan (SIP) with as little as Rs 250 per month.
According to him, consistency and staying invested for the long term are more important than investing large amounts at once.
Sebi is also working with the Ministry of Panchayati Raj to improve financial literacy across rural India.
In FY26 alone, the regulator conducted over 41,000 investor awareness programmes, reaching more than 22 lakh people nationwide.