Sebi to revamp SME listing norms, establish AI accountability rules

The Securities and Exchange Board of India (Sebi) will comprehensively review multiple aspects of the SME listing segment, including trading lot sizes, market-making provisions, underwriting requirements and migration rules, according to regulatory announcements. The overhaul aims to enhance market efficiency and attract greater participation in the segment that has emerged as a crucial funding avenue for smaller enterprises.

Simultaneously, Sebi is advancing proposed guidelines to govern the deployment of artificial intelligence and machine learning tools across regulated entities. The framework seeks to establish clear accountability mechanisms, ensuring that market participants using such technologies maintain transparent operations and assume responsibility for algorithmic trading and decision-making systems.

These regulatory interventions reflect Sebi's broader commitment to modernizing market infrastructure while maintaining robust investor protection standards. The SME framework review addresses structural impediments that may have limited the segment's growth, while the AI guidelines acknowledge the increasing prevalence of automated systems in capital markets and the need for enhanced supervisory oversight.

Market participants and SME-listed companies are expected to engage with Sebi during the consultation phase as the regulator finalizes implementation timelines and specific requirements. Industry stakeholders have long called for clarification on SME listing mechanics, and the move is anticipated to bring greater clarity to both issuers and investors participating in this segment.