Sebi Deploys AI to Combat Indian Market Manipulation

The Securities and Exchange Board of India is deploying artificial intelligence and machine learning to detect market manipulation and fraud. Using an in-house AI tool called Sudarshan and a dedicated data center in Mumbai, the regulator scans trading data, derivatives activity, and social media to identify anomalies such as pump-and-dump schemes.

To support this technological shift, the regulator expanded its technical staff to over 200 employees. These systems have reportedly accelerated IPO review processes by up to 70%. To prevent risks such as data poisoning and AI hallucinations, the agency requires human officials to review all AI-generated outputs to ensure regulatory and legal compliance.

Recent surveillance efforts led to enforcement actions against a unit of JPMorgan Chase & Co. after AI systems flagged suspicious activity in a closing auction mechanism. The regulator also initiated a case against Jane Street regarding the manipulation of the Nifty Bank Index.