The Securities and Exchange Board of India (Sebi) will soon issue guidelines for artificial intelligence (AI)-driven trading systems, Chairman Tuhin Kanta Pandey said on Monday.
“Cyber risk from AI has increased and we are now issuing an advisory on how the Sebi ecosystem and regulated entities can be protected from that enhanced risk,” Pandey told ANI on the sidelines of an event organised by the Association of Mutual Funds in India in Odisha. He added that the growing dependence on AI has heightened vulnerabilities that could threaten market integrity.
“If cyber security is threatened and vulnerabilities are found in software, then attacks can happen very, very quickly and may be successful. That, in turn, poses risks to market integrity,” Pandey said.
Two weeks ago, Sebi issued an advisory on emerging AI-led vulnerability identification tools such as Anthropic’s recent model Mythos. The regulator directed market participants to immediately update operating systems with the latest security patches to mitigate known vulnerabilities.
The launch of Mythos, designed to identify critical software vulnerabilities, had raised concerns globally over the potential misuse of such models at scale, although access remains limited to a few global players.
On municipal bonds & mutual funds
Speaking at the event, Pandey said municipal bonds could emerge as a key source of funding for urban infrastructure projects in Odisha as market participation deepens.
“In India, the municipal bond market is still evolving, but its importance cannot be overstated,” he said. “Globally, municipal bonds have been a cornerstone of city-level development, enabling urban local bodies to raise long-term funds for essential projects such as water supply, sanitation, transport and waste management.”
As of FY26, 22 urban local bodies across India have raised more than ₹4,500 crore through municipal bond issuances.
The number of investors from Odisha participating in the securities market has grown more than tenfold to 2.85 million in FY26 from FY15 levels (285,000). “This tells us something important. Awareness is rising. Aspirations are rising. Confidence is rising,” Pandey said.
Last week, Sebi proposed a series of reforms to the municipal bond framework, including easing fundraising norms and enabling pooled financing by multiple urban local bodies.
India’s corporate bond market has expanded to around ₹59 lakh crore over the past decade, from nearly ₹20 lakh crore earlier, Pandey noted. Retail participation in Indian securities markets has also surged, with the country now having around 145 million unique investors compared with 38 million in FY19.
However, only 9.5% of Indian households currently invest in securities market products, despite awareness levels standing at 63%, he added.
The Sebi chairman also said consistency in investing matters more than the amount invested, particularly in mutual funds. “What matters is starting early and staying invested for the long term. Over time, the power of compounding begins to work,” he said, adding that investors can start a systematic investment plan with as little as ₹250 per month.
Pandey further said Sebi is collaborating with the Ministry of Panchayati Raj to train panchayat representatives at the block level to promote financial literacy and investor awareness. In FY26, the regulator conducted more than 41,000 investor awareness programmes, reaching over 22 lakh participants across the country.