Sebi chief stresses responsible tech use, stronger market resilience

Speaking at the Business Standard BFSI Insight Summit, Pandey said technology would continue to redefine market functioning - from algorithmic trading to investment decisions

The Securities and Exchange Board of India (Sebi) is promoting the responsible use of emerging technologies such as artificial intelligence in financial markets, strengthening cybersecurity and preparing entities for change, said chairman Tuhin Kanta Pandey on Friday.

 

Technology will redefine market functioning — from algorithmic trading to investment decisions, he said at the Business Standard BFSI Insight Summit on Friday. “True resilience lies in foresight — the ability to read trends early, anticipate risks and prepare the system to withstand shocks. Building such capability, both within Sebi and across market institutions, will remain our key priority,” he said.

 

India’s capital markets have become a pillar of economic growth, underpinned by reforms that have made them more efficient, inclusive and resilient. India’s financial system functions as an interconnected ecosystem linking banks, corporates, mutual funds, insurers, pension funds and fintechs through a web of transactions, he noted. 

 

“These linkages bring efficiency and expand access to capital, but they also make the system more complex. A disruption in one segment can transmit rapidly to another,” he cautioned, stressing the need for coordination through the Financial Stability and Development Council.

 

Despite global challenges such as shifting trade policies, rising debt and geopolitical tensions, Pandey said India’s financial system is stable. This resilience reflects the shared commitment of regulators and market participants to safeguard stability while enabling growth.

 

He highlighted the widening reach of India’s capital markets, with the number of unique investors increasing from about 40 million in FY19 to over 135 million now. Market capitalisation has increased from 69 per cent of GDP in FY16 to around 129 per cent, while companies have raised almost Rs 7 trillion through equity and debt issuances in the current financial year till September. Investor participation from smaller towns is also growing, with about 18 per cent of mutual fund assets now originating from beyond the top 30 cities. 

 

Pandey outlined various reforms to strengthen market structure and investor protection. These include stronger governance frameworks for exchanges and clearing corporations, tighter liquidity norms and stress testing for mutual funds, and improved transparency in the corporate bond market. Sebi has also revised norms for initial public offerings (IPOs) by small and medium enterprises and equity derivatives to ensure market integrity.

 

To enhance ease of doing business, Sebi has simplified IPO and listing processes, digitised filings, streamlined KYC norms and proposed relaxed requirements for NRIs. It has also set clear approval timelines and improved grievance redressal.

 

Pandey said Sebi continues to foster market innovation. The regulator has expanded the scope of strategic investors in REITs and InvITs, reclassified REITs as equity for mutual fund investments, and introduced put options in non-convertible securities to enhance liquidity. Incentives have been revised to encourage mutual fund participation from women and investors in smaller towns, while Alternative Investment Funds have been granted more flexibility under accredited investor-only schemes.

 

“Collectively, these reforms have simplified operations, improved business conditions, strengthened governance, and reduced systemic risk — laying the foundation for a marketplace that is both resilient and welcoming to long-term capital,” he said.

 

Rejecting the notion that regulation and growth are opposing forces, Pandey said well-designed regulation can support both. “The shorter T+1 settlement cycle increased efficiency and reduced systemic exposure simultaneously,” he noted, adding that improved disclosures and governance have enhanced the credibility of Indian listed entities globally.

 

Pandey said Sebi is reviewing its regulatory framework to make it simpler and more contemporary. “Investor protection is not only about regulation; it begins with understanding,” he said, adding that the regulator will continue expanding financial literacy campaigns in regional languages.

 

“As we look to the future, our focus must remain on building a financial system that is strong yet agile, innovative yet responsible, and inclusive yet resilient,” Pandey concluded.