SEBI Leveraging AI For Initial Scrutiny Of IPO Papers

SUMMARY

The regulatory body finds AI useful for vetting the publicly available documents

For the private documents an in-house machine learning language module is needed for further checks and balances

Recently SEBI was reported to be planning to bring fintech firms under ambit of market norms

The Securities and Exchange Board of India (SEBI) has started tapping artificial intelligence for initial scrutiny of draft red herring prospectuses (DRHPs), said whole-time SEBI member Ananth Narayan.

Addressing the Securing Financial Stability Amid Global Spillovers event on Friday (February 16), Narayan said that AI was useful for vetting publicly available documents. In the case of private documents, an in-house machine learning language module is needed for further checks and balances, Moneycontrol reported.

“We are dipping our toes into some of this (AI) and the possibilities are endless,” he added.

On the Indian depositories, Narayan said, “Unlike the US depositories which would be holding on behalf of some broker or dealer, who, in turn, will be holding on behalf of other participants but Indian depositories know about every individual trader.”

This comes at a time when the financial regulatory bodies are putting strict checks on the private fintech players to ensure user safety and guidelines compliance.

Recently SEBI was reported to be planning to bring fintech firms under ambit of market norms.

Back then, whole-time SEBI member Kamlesh Varshney said that the primary task would be to bring most of the finfluencers into the regulatory net so that it becomes easy to monitor whether they are complying with the security laws.

Following this, SEBI, in a consultation paper, proposed relaxation in norms to help AIFs and VC funds in dealing with unliquidated investments of their schemes beyond their tenure expiry. In the paper, SEBI also stated that one-time flexibility should be provided to the AIFs and VC funds whose liquidation period has expired to deal with their unliquidated investments.

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