VARUN.INTELLIGENCEVI
Intelligence Beyond HeadlinesBy Varun Satheesh
Enacted & In ForceJurisdiction: IndiaPromulgated: June 2024

SEBI Directives on AI in Algorithmic Trading & Robo-Advisory Services

Governing Authority: Securities and Exchange Board of India (SEBI)
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Regulatory Category: Capital Markets AI & High-Frequency Trading
Official Reference Dossier
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Statutory Overview

SEBI regulatory directives establish strict oversight on algorithmic trading systems, autonomous order routing, and AI-driven wealth advisory platforms, guarding against flash crashes and unverified predictive claims.

Impact Summary: Shields retail Indian investors from unregulated algorithmic trading algorithms.

Key Compliance Requirements for AI Companies

Mandatory algorithmic testing in SEBI regulatory sandboxes before live market order execution.

Prohibition against deceptive marketing claiming 'guaranteed AI returns' or 'flawless algorithmic prediction'.

System audit trails storing every model version, input feature, and execution decision for a minimum of 5 years.

Legislative Timeline & Milestones

2024

Consultation Paper on AI Wealth Tech

SEBI reviews risks associated with unregistered social media AI trading bots.

June 2024

Final Circular

Strict registration and code audit guidelines promulgated.

Official Gazette & Regulatory References

Frequently Asked Questions & Legal Interpretations

Q:Are AI stock recommendation apps allowed under SEBI?

Only if the entity holds a valid SEBI Investment Adviser (RIA) or Research Analyst (RA) registration and conforms to disclosure standards.

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