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Technology · South Asia

Sebi weighs lending-rule changes and tests AI safeguards for markets

Sebi Chairman Tuhin Kanta Pandey said the regulator is reviewing short-selling and securities-lending rules while developing safeguards for trading terminals. Sebi is also exploring an AI sandbox and finalising guidelines that would include human oversight and other controls.

AI-assisted synthesis · Based on 4 outlets' reporting · Article text read from 2 of 4 outletsHow it's made

View timeline · 4 entries
4 outletsLatest reporting 3 min read
Coverage: Too few ratedL 0 · C 2 · R 0 · 2 unrated

What happened

Key facts

  • Sebi is reviewing short-selling and securities-lending and borrowing rules, with the stated aim of improving liquidity and price discovery (per business-standard.com).
  • Sebi is developing safeguards against misuse of trading terminals (per business-standard.com, moneycontrol.com).
  • Sebi is exploring an AI sandbox to test new tools and is finalising guidelines for responsible AI use (per business-standard.com).
  • Sebi is considering graded compliance requirements for stockbrokers (per business-standard.com, fortuneindia.com, moneycontrol.com).
  • Sebi is developing a market-making framework for corporate bonds to boost secondary trading (per business-standard.com).

The brief

The Securities and Exchange Board of India is reviewing short-selling and securities-lending rules while developing safeguards against misuse of trading terminals, chairman Tuhin Kanta Pandey said. He linked the review to improving market liquidity and price discovery.

Sebi is also exploring an artificial-intelligence sandbox, alongside guidelines intended to govern responsible AI use in markets. The regulator’s plans cover market oversight as well as trading rules. Sebi intends to bring its inspection portals into a single digital workflow, a change the regulator says would make supervision faster and more consistent.

It is also preparing a market-making framework intended to increase secondary trading in corporate bonds. Pandey said the AI framework would follow a tiered approach. The proposed safeguards include clear accountability, controls on data, kill switches and human oversight, drawing on a toolkit from the International Organization of Securities Commissions.

The sandbox would let innovators test tools under safeguards while providing regulatory certainty, according to Sebi’s stated plan. Sebi is also considering graded compliance requirements for stockbrokers. Fortune India reported that the proposed requirements would be linked to a broker’s business scale, client exposure and reliance on technology.

Business Standard also reported the plan for graded broker compliance, while Moneycontrol’s headline highlighted it alongside safeguards for trading-terminal use. The measures were outlined at the 16th International Capital Market Convention organised by the Association of National Exchanges Members of India in Mumbai.

Pandey’s comments there put risk controls alongside market-development measures: Sebi is reviewing rules around short selling and securities lending while considering ways to support bond trading and adapt supervision to technology use. A separate development under Sebi’s Demat 2.0 initiative concerns tokenised corporate bonds.

Fortune India reported that these are expected to trade in the secondary market in the initiative’s next phase. The report did not specify a timetable or describe the operational arrangements for that trading. Pandey said algorithms account for a growing share of trades and urged market participants to plan for failure.

The remark accompanied Sebi’s plans for AI safeguards and terminal protections, while the regulator’s proposed measures also include a consolidated inspection workflow and broker requirements calibrated to scale, client exposure and technology dependence.

Why it matters

  • Stockbrokers could face compliance requirements calibrated to business scale, client exposure and reliance on technology, rather than a uniform framework.
  • Trading firms and investors have a direct stake in the proposed safeguards against terminal misuse and in AI controls such as data protections, kill switches and human oversight.
  • Sebi’s planned single digital inspection workflow would change how the regulator conducts supervision, while its corporate-bond market-making framework aims to support secondary trading.
  • Tokenised corporate bonds are expected to enter secondary trading under the next phase of Demat 2.0, creating a specific market-development issue for Sebi’s oversight.

What to watch next

  • Whether Sebi finalises its responsible-AI guidelines and how it applies the proposed tiered approach, data controls, kill switches and human oversight.
  • How Sebi designs the AI sandbox, including the safeguards and testing arrangements for new tools.
  • Whether Sebi advances its review of short-selling and securities-lending rules and what changes it proposes to improve liquidity and price discovery.
  • How Sebi develops the graded broker-compliance framework and the corporate-bond market-making measures.

How it's being covered

Coverage analysisShow details
4 source articles · 4 unique outlets
Outlet political mix: Too few rated· 2 Center · 2 unrated
Where the outlets are based: Asia 100%
Outlet political mix
Too few rated
Left
Center
Right
0 outlets
2 outlets
0 outlets
The marker shows coverage balance: each unique outlet counts once. 2 unrated outlets are not included.
Geography
Where the outlets covering this story are based.
4 unique outletsDominant coverage: Asia
Coverage imbalance
  • Coverage is currently concentrated among outlets based in Asia (4 of 4 geographically-identified sources).
How we measure coverage

How outlets' accounts compare

2 framing differences · 1 uncorroborated claim · 1 information gap
The reports repeat the same account with different emphasis; its central claims are not independently confirmed in the reporting Updat3 read.Compared across 2 reports whose article text Updat3 read; 2 other outlets were checked by headline only.
Framing / emphasis differences
Sources emphasise different angles, actors or consequences of the same reporting.
  • Business Standard foregrounds the review of short-selling and securities-lending rules, the AI sandbox and inspection-platform consolidation; Fortune India gives additional emphasis to graded broker compliance and tokenised corporate bonds under Demat 2.0.
  • Moneycontrol’s headline highlights terminal safeguards and graded broker compliance, while News On AIR’s headline focuses on retail broking’s potential growth in towns and villages.
Updat3: These are differences of emphasis, not disputes about what is reported. They do not show that the reported claims are true.
One-sided or uncorroborated claims
Claims that come from one party or one source family and are not independently corroborated.
  • Pandey said algorithms drive a growing share of trades and urged market participants to plan for failure.
Updat3: Not independently corroborated yet — treat as a claim, not an established fact.
Not established by the reporting
Information the available reporting does not contain or confirm. This is a gap, not a disagreement.
  • The sources do not state when Sebi will finalise or implement the proposed rules, guidelines, sandbox or market-making framework.
Updat3: Updat3 cannot conclude anything about this from the current sources.

Timeline

Developments from this story's sources, dated background we compiled and fact-checked, and our earlier coverage. Each row says which.
  1. SEBI introduced the Stock Brokers and Sub-Brokers Regulations.
    Background · compiled and fact-checked by Updat3
  2. India’s modern electronic-trading infrastructure expanded after the National Stock Exchange began operations in 1994.
    Background · from our historical context
  3. That framework followed SEBI’s April 2008 introduction of a securities lending and borrowing mechanism, which enabled market participants to lend securities and support settlement of short sales.
    Background · from our historical context
  4. SEBI issued a revised short-selling framework, allowing institutional investors to short-sell securities and requiring brokers to collect and report short-sale positions.
    Background · compiled and fact-checked by Updat3

How we got here

On January 5, 2024, SEBI issued a revised short-selling framework, allowing institutional investors to short-sell securities while requiring brokers to collect and report short-sale positions; it also said securities in the futures-and-options segment could be short-sold.

That framework followed SEBI’s April 2008 introduction of a securities lending and borrowing mechanism, which enabled market participants to lend securities and support settlement of short sales.

Original sources

4 articles from 4 outlets · Asia · Show all

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