Investment Advisers, Research Analysts should disclose AI tool usage to clients: SEBI

SEBI emphasizes disclosure of AI tool usage in investment services to ensure data security and informed decision-making for clients.

Securities and Exchange Board of India (SEBI) has proposed that registered Investment Advisers and Research Analysts who employ artificial intelligence (AI) tools in their services must disclose the extent of usage to clients, emphasizing the importance of strong security measures to avoid unintended data exposure.

This transparency is crucial for clients to understand how AI tools contribute to their investment decisions and to make informed choices about their advisory services.

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"The possibility of unintended data exposure highlights the need for strong security measures and clear disclosure to clients about the extent of AI tool usage", Trivesh D, COO at Tradejini, a stock trading platform, said.

SEBI in its consultation paper earlier this month, highlighted the growing usage of AI tools in Investment Adviser (IA) and Research Analyst (RA) services.

With technological innovations and advancements, many AI tools are currently available in chatbot form such as OpenAI's ChatGPT, Google's Gemini, etc.

AI-based tools allow one to have human-like conversations and receive human-like responses with the chatbot. These tools assist various tasks such as summarising and analysing data and may help in improving efficiency and productivity.