IAs, RAs must disclose AI tool usage to clients: Sebi

New Delhi: Sebi has proposed that registered Investment Advisers and Research Analysts, who employ artificial intelligence (AI) tools in their services, must disclose the extent of usage to clients, emphasizing the importance of strong security measures to avoid unintended data exposure. This transparency is crucial for clients to understand how AI tools contribute to their investment decisions and to make informed choices about their advisory services.

“The possibility of unintended data exposure highlights the need for strong security measures and clear disclosure to clients about the extent of AI tool usage,” said Trivesh D, COO at Tradejini, a stock trading platform.

The Securities and Exchange Board of India (Sebi), in its consultation paper earlier this month, highlighted the growing usage of AI tools in Investment Adviser (IA) and Research Analyst (RA) services. With technological innovations and advancements, many AI tools are currently available in chatbot form such as OpenAI’s ChatGPT, Google’s Gemini, etc.