SEBI plans AI guidelines and a new closing auction framework

SEBI has signalled two pieces of work for capital markets: responsible-use guidelines for AI and machine learning, and guidance for the Closing Auction Session.[1][2] The AI guidelines are expected shortly, while the CAS guidelines are expected within about a week.[1][2] Pandey announced the CAS timeline on Saturday at the second Capital Market Confluence 2026 in Mumbai, organised by the Bombay Stock Exchange Brokers’ Forum.[2] He also said SEBI was examining comments on a consultation paper related to the CAS framework.[2] For firms tracking regulatory change, the two timelines should be treated separately.

The proposed AI and machine-learning guidelines include tiered oversight, data controls, kill switches and human accountability.[2] SEBI’s proposal is aligned with the IOSCO Supervisory Toolkit.[2] Compliance and technology teams can use the announced components to identify questions for internal review, while waiting for the issued guidelines to clarify the requirements.

SEBI’s circular describes CAS as being introduced in the equity cash segment, initially for cash-segment stocks that have derivative contracts.[3] It sets out a separate 20-minute session from 3:15 p.m. to 3:35 p.m. on trading days.[3] Before CAS, the closing price of equity cash stocks was based on the volume-weighted average price of trades during the last 30 minutes of continuous trading.[3] SEBI says a fair and transparent closing price matters particularly because it is used as the reference for derivatives settlement.[3] The forthcoming guidance is intended to address expiry-day settlement-price concerns.[2]