India: SEBI’s AI Regulation Proposal Sparks Industry Debate

In this article:

• SEBI’s Accountability Focus: The draft amendments require regulated entities (REs) to comply with stringent legal standards, ensure data privacy, and assume full liability for AI/ML-generated outcomes, aiming to safeguard investors and market integrity.

• ASIFMA’s Critique: The Asia Securities Industry & Financial Markets Association opposes SEBI’s one-size-fits-all approach, warning it could hinder technological innovation.

• Shared Responsibility Model: ASIFMA advocates for distributing accountability across the AI lifecycle, emphasizing a more balanced regulatory framework.

• Liability Concerns: The association highlights the unfairness of holding institutions liable for client decisions made independently using accurate AI-generated data.

• Proposed Alternatives: ASIFMA suggests nuanced regulations that reflect the complexities of AI implementation and encourage innovation without compromising accountability.

• The industry body has proposed several constructive alternatives to SEBI’s approach.