The Securities and Exchange Board of India (SEBI) is aggressively expanding its use of artificial intelligence to monitor and police its $5 trillion stock market, targeting manipulative trading and financial fraud. This tech-driven surveillance push comes as India's capital markets deepen and retail participation grows, with SEBI Chairman Tuhin Kanta Pandey emphasizing the need for regulation to keep pace with market complexity and scale. The regulator is actively scrutinizing prominent foreign players, having recently accused a Mauritius-based JPMorgan unit of manipulative stock trades and Jane Street of market manipulation last year.
SEBI is deploying several AI-powered systems for various regulatory functions. Its Cyber Security Audit Compliance Portal (CSAC) analyzes cybersecurity controls across market participants, flagging gaps and non-compliance. Project SUDARSAN, operational since November 2025, monitors social media for fraudulent investment claims, unregistered advice, and impersonation, having identified over 20,000 instances of fraudulent content. Another tool, R(AI)DAR, scans advertisements and investor education materials from asset management companies for violations. Furthermore, SEBI is developing a dedicated AI model to analyze corporate filings and quarterly results to detect financial manipulation and misstatements, expanding its AI use beyond just trading data.
Despite the extensive use of AI, SEBI Chairman Tuhin Kanta Pandey stressed that AI-generated alerts are not findings and regulatory decisions must remain subject to human oversight. He cautioned against overtrusting machines and highlighted the importance of competent, empowered, and accountable human oversight, along with safeguards such as explainability, validation, and continuous testing for AI models. Pandey also warned about potential concentration risks created by AI, citing common models and cloud infrastructure as potential shared points of failure. SEBI's in-house InfoMerge system also leverages AI to automate data collection, analysis, and report preparation for investigations into insider trading and fraudulent practices, including analyzing KYC and trading data to identify suspicious patterns.
