SEBI Charting a Course for India to Become a Global Fund Management Hub, Embracing AI Responsibly
MUMBAI, India – The Securities and Exchange Board of India (SEBI) is actively pursuing a series of ambitious reforms aimed at transforming India into a significant global player in the fund management industry. Speaking in Mumbai on Wednesday, SEBI Chairman Tuhin Kanta Pandey revealed the regulator’s strategic initiatives, which encompass bolstering market infrastructure, deepening various market segments, and responsibly integrating cutting-edge technologies like Artificial Intelligence (AI).
A cornerstone of SEBI’s vision is the development of a robust framework to facilitate global fund management activities from within India. This proactive measure is expected to attract international investment and talent, positioning India as a competitive hub for financial services.
To enhance the liquidity and efficiency of cash markets, SEBI is undertaking a comprehensive review of both the Securities Lending & Borrowing Mechanism (SLBM) and existing short-selling frameworks. These revisions are anticipated to introduce greater flexibility and encourage increased participation. In the debt markets, proposed changes include greater flexibility for International Securities Identification Numbers (ISIN), fostering the growth of Environmental, Social, and Governance (ESG) debt, and implementing technology-driven enhancements within the corporate bond market.
Furthermore, Pandey announced that SEBI is working on a dedicated framework for portfolio managers, enabling them to invest client funds in foreign securities. This move will provide Indian investors with broader diversification opportunities and align the domestic market with international investment trends.
Pandey underscored the pivotal role of technology in modern market infrastructure. He highlighted how "Digital KYC, paperless onboarding, mobile platforms and electronic payments have reduced friction across the investment journey," making financial participation more accessible and efficient for investors.
Addressing the transformative potential of Artificial Intelligence, Pandey acknowledged its capacity to strengthen critical market functions such as surveillance, risk assessment, fraud detection, and investor servicing. However, he also cautioned against the inherent risks associated with AI, including opacity, bias, cybersecurity vulnerabilities, data protection concerns, and accountability challenges.
"The question is not whether markets will use AI. The question is how we use it responsibly, while preserving trust," Pandey emphasized, highlighting SEBI’s commitment to a balanced and ethical approach to technological adoption.
Looking ahead, the SEBI chief articulated that India’s burgeoning economy will continuously open new investment frontiers. He stressed that the nation will require substantial capital for crucial sectors like infrastructure, technology, advanced manufacturing, energy transition, data centers, and new-age enterprises, particularly those leveraging AI, encompassing both hardware and applications. Pandey affirmed that efficient public markets, deeper bond markets, Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs), Alternative Investment Funds (AIFs), and innovative fund management products will all play instrumental roles in meeting these capital demands.
Adding to the discussion, K V R Murty, Whole Time Member, SEBI, lauded the introduction of the Consolidated Account Statement (CAS) in the equity cash segment as a significant advancement for the Indian market. He noted that it "ensures that the closing price reflects collective market consensus," thereby enhancing market transparency and fairness.
These strategic initiatives by SEBI signal a clear intent to modernize and expand India’s financial markets, fostering an environment conducive to global investment and sustainable economic growth, all while prioritizing responsible technological integration. For more details on these developments, readers can refer to the original source.
