SEBI vide circular dated 16th December, 2024 has issued the Securities and Exchange Board of India (Investment Advisers) (Second Amendment) Regulations, 2024. The amendment provides that an investment adviser who uses Artificial Intelligence tools, irrespective of the scale and scenario of adoption of such tools, for servicing its clients shall be solely responsible for the security, confidentiality, integrity of the client data, use of any other information or data to arrive at investment advice, investment advice based on output of Artificial Intelligence tools and compliance with any law for the time being in force.
An investment adviser who provides advisory services in respect of products or services which are outside the purview of the Board, shall disclose to the client that such products or services and his advisory services in respect of such products or services are outside the regulatory purview of the Board and no recourse from the Board shall be available to such clients for any grievance arising therefrom.(9) An investment adviser shall disclose to the client the extent of use of Artificial Intelligence tools in providing investment advice.
