Mumbai, Securities and Exchange Board of India Chairman Tuhin Kanta Pandey announced on Saturday that the market regulator is developing a graded compliance framework for stockbrokers, a regulatory sandbox for artificial intelligence applications, and a market-making mechanism for corporate bonds.

Addressing the 16th ANMI International Capital Market Convention in Mumbai, Pandey stated that the regulatory body is examining a compliance regime scaled according to a broker’s size, client exposure, and technological dependence. The initiative aims to enhance capital efficiency while simultaneously easing compliance burdens for market participants.

The regulator is also formulating a market-making framework to stimulate secondary market trading in corporate bonds. Under the upcoming phase of Demat 2.0, tokenized corporate bonds will be permitted for secondary market trading to improve liquidity, minimize settlement risks, and accelerate capital access.

Furthermore, the capital market watchdog is exploring an artificial intelligence sandbox to test novel tools in a controlled environment while establishing regulatory safeguards. Pandey noted that guidelines on responsible artificial intelligence use are being finalized, incorporating accountability standards, data controls, kill switches, and human oversight in alignment with International Organization of Securities Commissions recommendations.

Addressing retail investor protection, the Securities and Exchange Board of India chairman cautioned that unregistered advisers and social media influencers are increasingly influencing retail investment choices. To combat associated financial fraud, the regulator has introduced validated Universal Payment Interface handles, the SEBI Check platform, and verified badges for trading applications.