Amid concerns around Anthropic’s artificial intelligence (AI) model Mythos, Securities and Exchange Board of India (Sebi) Chairperson Tuhin Kanta Pandey on Monday said it will soon issue an advisory to market participants outlining how they should stay alert to vulnerabilities and play a proactive role in mitigation.
Pandey said the regulator was engaging with all stakeholders cautioning them of the risks posed by Mythos. SEBI, he said, is in constant touch with market participants and relevant stakeholders as the challenge after Mythos and similar AI models will “test our resilience”. He was speaking at the IMC capital markets conference.
“As you know, Mythos is only available to a very few entities, it’s not widely available, but nevertheless, it presents grave risks,” he observed. He added that it’s important for market players to use whatever tools they have to proactively find vulnerabilities themselves and patch them.
Pandey also spoke about the risks of innovation and the surge in powerful AI models. “Technology may be misused. Algorithms may move faster than human controls. Digital platforms may become channels for fraud.” While AI tools can identify weaknesses faster, they can also exploit vulnerabilities at speed and scale, the SEBI chief added.
The SEBI chief observed that India’s private credit market remains largely insulated from global uncertainties due to regulatory safeguards. “We do not allow retail participation because we have a minimum commitment requirement,” he said adding that even accredited investors have a minimum investment threshold. “We do not allow general retail participation in AIFs precisely because of their illiquid nature. Whenever there is a liquidity crisis, this could lead to significant problems,” the SEBI chief said.
Commodity derivatives instruments
The banking and insurance regulators are not inclined to allow banks and insurance companies to participative in commodity derivatives, Pandey said. “We engaged with them, and they had their rationale that, at this moment, they don’t feel it is the right time or the right thing… because insurance is a long-term commitment,” the SEBI chief said.Last year, Sebi had said that it would engage with policymakers to explore expanding the investor base—by including pension funds, banks and others– in commodities derivatives.
The regulator has not spoken to the GST Council about the physical delivery of commodity derivatives but has “sent in the problem areas emanating from commodities, particularly related to taxes”. The current tax system makes it very cumbersome for physical delivery, Pandey said, adding that it has proposed that there could be an IGST mechanism instead of the current SGST.”
The Chairman clarified that two versions of CKYC 2.0 would be launched. The initiative aims to create a “One KYC” (Know Your Customer) system across all financial institutions. “The C-KYC technology portal they are preparing will likely be substantially completed by July,” Pandey said.