India – Reporting For Artificial Intelligence And Machine Learning Applications And Systems Offered And Used By Market Intermediaries.

 

17 January, 2019

 

 

On January 3, 2019, SEBI issued the reporting mechanism for Artificial Intelligence (AI) and Machine Learning (ML) applications and systems offered and used by market intermediaries. There is increasing usage of AI (Artificial Intelligence) and ML (Machine Learning) as product offerings by market intermediaries and participants (eg: “robot advisors”) in investor and consumer facing products. As most AI / ML systems are black boxes and their behavior cannot be easily quantified, it is imperative to ensure that any advertised financial benefit owing to these technologies in investor facing financial products offered by intermediaries should not constitute to misrepresentation. Accordingly the regulatory requirements as directed by SEBI are as follows:

 

(a) All registered Stock Brokers / Depository Participant offering or using applications or systems, should participate in the reporting process by completing the AI / ML reporting form (as given in the circular).

 

(b) With effect from quarter ending March 2019, registered Stock Brokers / Depository Participant using AI / ML based application or system as defined in Annexure B, are required to fill in the form and make submissions on quarterly basis within 15 calendar days of the expiry of the quarter.

 

(C) Stock Exchanges and Depositories have to consolidate and compile a report, on AI / ML applications and systems reported by registered Stock Brokers/ Depository Participants in the

reporting format quarterly basis. The said report shall be submitted in soft copy only at AI_SE@sebi.gov.in (for Stock Exchange) / AI_DEP@sebi.gov.in (for Depositories) to SEBI within 30 calendar days of the expiry of the quarter, starting from quarter ending March 2019.

 

Acceptance of Probate of Will or Will for Transmission of Securities held in dematerialized mode.

 

On January 4, 2019, SEBI, in order to harmonize the procedures for transmission of securities in dematerialized mode with that of transmission of securities in physical mode, decided that transmission of securities held in dematerialized mode shall be dealt in line with Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) (Sixth Amendment) Regulations, 2018.

 

In terms of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) (Sixth Amendment) Regulations, 2018,succession certificate or probate of will or will or letter of administration or court decree, as may be applicable in terms of Indian Succession Act, 1925 has been prescribed as documentary requirement for transmission of securities held in physical mode. With regard to transmission of securities held in dematerialized mode, the same is dealt in terms of bye laws of the Depositories.

 

The provisions of this circular shall be applicable with immediate effect.

 

 

For further information, please contact:

 

Vineet Aneja, Partner, Clasis Law

vineet.aneja@clasislaw.com