SEBI will now keep track of artificial intelligence (AI) and machine learning (ML) solutions offered by fund houses. This solution includes software, app, execution services, investment strategies, investment advice and operational activities.
In a circular issued today, the market regulator has asked fund houses to submit reports of their AI and ML activities every quarter starting from the first quarter of FY 2019-20. AMCs will have to submit their report within 10 days of the end of each quarter.
The market regulator has entrusted AMFI to submit a consolidated report to SEBI and maintain confidentiality of such activities of AMCs.
SEBI signalled that it would review the existing AI and ML solutions offered by AMCs. “There is increasing usage of AI and ML as product offerings by market intermediaries and participation such as robo-advisors in investor and consumer facing products. SEBI is conducting a survey and creating an inventory of the AI/ML landscape in the Indian financial markets to gain an in-depth understanding of the adoption of such technologies in the markets and to ensure preparedness for any AI/ML policies that may arise in the future, ” said SEBI.
The regulator further added, “As most AI/ML systems are black boxes and their behavior cannot be easily quantified, it is imperative to ensure that any advertised financial benefit owing to these technologies in investor facing financial products offered by intermediaries should not constitute misrepresentation.”
