Reporting for Artificial Intelligence (AI) and Machine Learning (ML) applications and systems offered and used by market intermediaries

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..... ucts. SEBI is conducting a survey and creating an inventory of the AI / ML landscape in the Indian financial markets to gain an in-depth understanding of the adoption of such technologies in the markets and to ensure preparedness for any AI / ML policies that may arise in the future. 2. 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 Scope definition 3. Any set of applications / software / programs / executable / systems (computer systems) - cumulatively called application and systems, a. that are of .....

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..... a report, on AI / ML applications and systems reported by registered Stock Brokers / Depository Participants in the reporting format (Annexure C) on quarterly basis. The said report (Annexure C) shall be submitted in soft copy only at [email protected] (for Stock Exchange) / [email protected] (for Depositories) to SEBI within 30 calendar days of the expiry of the quarter, starting from quarter ending March 2019. 8. Stock Exchanges and Depositories shall; a) make necessary amendments to the relevant byelaws, rules and regulations for the implementation of the above direction; b) bring the provisions of this circular to the notice of their members/participants and also disseminate the same on their websites; and c) communicate to SEBI, .....

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..... 8 What is the name of the Tool / Technology that is categorized as AI and ML system / Application and submissions are declared vide this response 9 How was the AI or ML project implemented 10 Are the key controls and control points in your AI or ML application or systems in accordance to circular of SEBI that mandate cyber security control requirements 11 Is the AI / ML system included in the system audit, if applicable? 12 Describe the application / system and how it uses AI / ML as portrayed in the product offering 13 What safeguards are in plac .....

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..... algorithms to categorize data without a predefined set of categories 5. A system that uses a feedback mechanism to improve its parameters and bases it subsequent execution steps on these parameters. 6. A system that does knowledge representation and maintains a knowledge base. Annexure C - Consolidated Quarterly Reporting Form Consolidated Quarterly report to SEBI of all registered intermediaries with Stock Exchange / Depositories using AI and ML application and systems for the Quarter Ended DD/MM/YYYY Entity registrati on number Entity name Entity PAN no. Application / System name Date used from Type of area where AI or ML is used To be filled if System Audit is applicable If system audit report is submitted by entity l .....

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