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Informist, Thursday, Sept. 10, 2026

 

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--SEBI chief:Technology been central to rapid growth of our security markets
--CONTEXT: SEBI Chairman Pandey's comments at Global Fintech Fest 2026
--SEBI chief: Regulatory risk changes as mkts become larger, faster
--SEBI chief: Want to make supervision capable of finding risks early
--SEBI chief: Using AI, tech patterns to identify risks early
--SEBI chief:Exploring mkt architecture where settlement is more programmable
--SEBI chief: Must prepare for risks arising from new tech
--SEBI chief: Migration to quantum systems to tackle threats cannot wait
--SEBI chief: Growing fast, safe are not competing ambitions
--SEBI chief: Have opportunity to enable tech to make mkts faster, efficient
--SEBI chief: Oversight should be risk-based, proportionate
--SEBI chief:Accountability stays with regulated entity when tech outsourced
--SEBI chief: Looking ahead to be ready for quantum tech
--SEBI chief: Need compensating controls if transparency limited
--SEBI chief: AI use can inform, not replace regulatory judgement
--SEBI chief: Safeguards, human oversight must guide AI tools
--Dutch Authority for Fincl Mkts member:Examining quantum tech threat in mkts
--CONTEXT: Dutch Authority for Fincl Mkts member Beusekom at fintech event
--Dutch Authority for Fincl Mkts member: Agentic AI risks can be contained
 

 

MUMBAI - Migration to quantum safe systems cannot begin after the threat from cryptography-driven quantum technologies becomes real, Securities and Exchange Board of India Chairman Tuhin Kanta Pandey said. Speaking at the Global Fintech Fest 2026, the SEBI chief said the quantum threat to current cryptography might not be an immediate operational problem, but the migration cannot wait.

 

This will require "prioritisation of critical systems, crypto agility, and a phased transition," he said. SEBI's cybersecurity and cyber-resilience framework recognises quantum computing as a potential cybersecurity threat, according to Pandey. "We have therefore embedded quantum resilience in our cybersecurity strategy," he said. 

 

The SEBI chief emphasised that innovation must be scaled up without risk scaling at the same pace. "That's a challenge of growing fast, growing safe," he said. The Indian securities market's rapid growth on the back of technology has brought about digital onboarding, electronic payments, robust clearing and settlement, and the ability to trace transactions to the ultimate investor, and also made participation wider and more secure, according to Pandey.

 

But as markets become larger, faster, and more interconnected, regulatory risk also changes, the SEBI chief said. Vulnerability in one part of the ecosystem can travel much faster, and failure of one entity poses market-wide risks, Pandey said.

 

"As market participants use advanced technologies at greater speed and scale, regulators must be able to supervise with comparable sophistication. This is where 'SupTech' offers tremendous opportunity," according to the SEBI chief. Pandey, however, said SEBI is conscious of the fact that the end objective is not simply to automate supervision but to use data, analytics, and AI to identify patterns that may not be visible through traditional methods.

 

On supervision of technology service providers and vendors, Pandey was of the view that technology may be outsourced, but regulatory responsibility cannot. "Accountability stays with the regulated entity. Market intermediary or institution cannot transfer responsibility for compliance, resilience or market integrity to a technology provider or a vendor," he said.

 

But oversight should be risk-based and proportionate, and routine vendors do not need an intermediary-style regulation, the SEBI chief said. "Oversight should rise with proximity to trading, settlement, sensitive data and investor outcomes," he said.

 

On the use of AI by the regulator, Pandey said it could only inform but not replace judgement. However, it allows the regulator to move to proactive monitoring from periodic, he said. "AI can process large data sets, detect patterns, direct supervisory attention to emerging risks," the SEBI chief said.

 

Pandey warned that an AI-generated analytical algorithm is not a finding. "The higher the consequence of that alert, the stronger the human control should be," he said. Enforcement and adjudication cannot be delegated to AI. "Human oversight, explainability, validation, continuous testing, data quality, bias controls, model drift monitoring, and cyber-security," is needed, according to the SEBI chief. Further, "every production AI system needs a stop mechanism," Pandey said.

 

On the use of AI by market participants, Pandey said critical providers could change models, software and architecture. "Controls must therefore include change notifications, continuous testing and periodic reassessment," he said. Further, opacity cannot dilute the comfort, and where transparency is limited, compensating controls must rise, according to Pandey.

 

Regulation must look ahead, according to the SEBI chief. SEBI's quantum readiness work for example, where SEBI covers cryptographic inventories, post-quantum assessment, crypto-agility and continuous monitoring, he said.

 

Hanzo Van Beusekom, a board member of the Netherlands capital markets regulator Dutch Authority for the Financial Markets, said the use of AI has moved from classic to generative to agentic now where agents nearly autonomously perform a range of rather complicated tasks.

 

"If you release agentic AI on financial markets, you get interesting things. We've been seeing it for a while now. It's been in a remit for example on trading venues and financial markets," Beusekom said. He said algorithmic and bot trading has been around for a while.

 

The markets have seen the flash crash already about 10 years ago, Beusekom said. "We have learned how to deal with that, which is make sure there's circuit breakers, make sure there's a human in the loop, make sure that there's clear governance, and we think that we can learn from that now that agentic AI is coming up to the next step," he said. There is no need to ban agentic AI in financial markets as risks from it can be contained by regulators, he said.  End

 

Reported by Rajesh Gajra and Anand JC

Edited by Avishek Dutta

 

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