India’s markets regulator is preparing safeguards against trading-terminal misuse while considering risk-based broker rules, an AI sandbox and a unified digital inspection system.
Sebi is preparing a new framework to curb the misuse of trading terminals, as chairman Tuhin Kanta Pandey signalled a sharper regulatory focus on how brokerage infrastructure is being used across India’s markets. Speaking at an event organised by the Association of National Exchanges Members of India in Mumbai on Saturday, Pandey said the regulator wants cyber security to be treated as a core business issue rather than a back-office technology cost, reflecting the growing concern that weaknesses in trading systems can quickly spill into market risk. Moneycontrol reported that the proposed safeguards are intended to reduce the chances of terminals being misused while improving oversight across the financial system.
Pandey also said Sebi is considering a graded compliance regime for brokers, with requirements shaped by a firm’s size, client exposure and dependence on technology. That approach would mark a shift towards supervision that is more closely tailored to the risk profile of each intermediary, rather than applying the same compliance burden across the board. The Times of India reported that the chairman linked the plan to broader market supervision reforms, including efforts to strengthen resilience as trading and brokerage operations become more digitised.
Alongside the terminal safeguards, Sebi is weighing an artificial intelligence sandbox, which would allow new tools to be tested in a controlled setting before wider deployment. Pandey said the regulator is finalising guidance on responsible AI use, with a framework built around accountability, data controls, kill switches and human oversight, in line with the International Organization of Securities Commissions’ toolkit. Moneycontrol has separately reported that Sebi sees AI as both a useful tool for surveillance and fraud detection and a source of risks, including opacity, bias and concentration of technological power, underscoring why regulators are trying to keep pace with rapid innovation.
Pandey also said inspection portals will be merged into a single digital workflow to make supervision faster and more consistent. Beyond the regulatory architecture, he pointed to the next phase of retail broking growth coming from smaller towns and villages rather than the large metros, citing Sebi survey findings that show strong public interest in investing. He urged brokers to treat know-your-customer checks as an ongoing conversation about a client’s needs and risk appetite, not a one-time form-filling exercise, arguing that better-informed investors are more likely to stay in the market for longer. Business Standard has reported in recent months that Sebi has been pressing for stronger cyber defences and more continuous risk monitoring, suggesting the chairman’s remarks fit into a wider push to harden India’s market infrastructure against more sophisticated digital threats.
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