Mumbai

Securitiesand Exchange Board of India (SEBI) Chairman Tuhin Kanta Pandey said on Thursday that the market regulator is reworking the methodology for determining the closing prices under the recently launched closing auction session (CAS) for derivatives contracts on expiry days, while acknowledging that the rollout of CAS across jurisdictions faced initial chal-lenges, particularly around liquidity.

Speaking on the second day of the Global Fintech Fest 2026 here, Pandey clarified that the CAS framework is here to stay, citing smooth implementation and positive feedback from global in-dex provider MSCI and emphasising the need for robust guardrails as artificial intelligence be-comes more deeply embedded in financial markets.

Pandey said MSCI had acknowledged that recent index rebalancing exercises were carried out smoothly under the CAS framework. He acknowledged that the rollout of CAS across jurisdic-tions had faced initial challenges, particularly around liquidity. "Initial liquidity was an issue after implementation. However, liquidity builds up over time," he said.

On artificial intelligence, the SEBI chief said the emergence of agentic AI systems requires regu-lators and market participants to establish clear boundaries around their use. "Agentic AI raises the bar, so we need to define access, autonomy, admissible action and perceptibility. Agentic AI also needs hard boundaries on what we cannot do," he said.

According to Pandey, every production-level AI system should have mechanisms that allow for auditability, research validation and change logging to ensure accountability and transparency. He stressed that innovation and safety should advance together. "Growing fast and growing safe are not competing ambitions," Pandey said.

"A market can grow sustainably when innovation is accompanied by trust, and trust is sustained by resilience." He said the regulatory challenge is to create a framework that enables technolog-ical innovation while preserving the core principles of investor protection, market integrity and financial stability.