Securities and Exchange Board of India (Intermediaries) Regulations, 2008

What it does

The Regulations are the general rules for intermediaries, such as stock brokers, merchant bankers, registrars and share transfer agents, and the other persons who must be registered with the Securities and Exchange Board of India (SEBI) to act in the securities market. Each class of intermediary has its own regulations, and these Regulations sit across them. They supply what the class-specific regulations do not repeat.

They cover the procedure for applying for registration and the standard of conduct for a person who is registered. A key element is the fit and proper person test, which SEBI applies in deciding whether to grant registration and in judging the continued standing of an intermediary. They contain general obligations that apply to all intermediaries, a code of conduct, the powers of SEBI to inspect, and the procedure to be followed where SEBI proposes to take action, which includes a show cause notice, a hearing, and orders such as suspension or cancellation of registration.

Who it binds

Intermediaries registered with SEBI, and persons who have applied to be. The framework reaches the directors, partners and key personnel of an intermediary as well, since the fit and proper test looks at them. Persons who deal with an intermediary are not bound by the Regulations, though they bear the consequences when an intermediary is penalised or loses its registration. Appeals against an order lie to the Securities Appellate Tribunal under the Securities and Exchange Board of India Act, 1992.

What has changed, and when

The Regulations date from 2008 and have been amended several times. The change that matters for technology is regulation 16C, inserted by the Securities and Exchange Board of India (Intermediaries) (Amendment) Regulations, 2025 (F. No. SEBI/LAD-NRO/GN/2025/226), made at Mumbai on 6 February 2025 and published in the Gazette of India Extraordinary on 10 February 2025. It inserts a new Chapter IIIB, headed usage of artificial intelligence, containing regulation 16C, and it came into force on publication in the Gazette.

Under regulation 16C, a regulated person who uses artificial intelligence or machine learning tools, whether built in house or bought, is solely responsible for the privacy and integrity of investor data, for the output of the tools it relies on, and for compliance with the law. The site's notes say SEBI's wider guidelines on the use of artificial intelligence were, as far as could be traced, still a June 2025 consultation, so regulation 16C is the binding rule in force.

What turns on it in practice

The point of regulation 16C is that it sets responsibility by outcome. A broker, an adviser or another regulated firm cannot answer a regulator by saying that the fault lay with the vendor of the tool. A contract with an artificial intelligence vendor can move the money, through an indemnity or a cap, but it does not move the responsibility. The site's notes on contracts, diligence and disclosure for artificial intelligence, and on what binds in India today, make this point for regulated businesses and suggest that diligence should examine what the target really owns and what controls it has over the tool.

Outside the artificial intelligence rule, the Regulations matter whenever a registration is in play: on an acquisition of a regulated firm, where the fit and proper test applies to the new controlling persons; on a change in the ownership or the business of an intermediary; and when SEBI starts an inquiry, where the procedure in the Regulations decides what notice and hearing the firm is entitled to. Failure to follow the procedure is a ground for challenge on appeal.

These are matters for a transaction, funds or advisory team working with a registered firm, and the Regulations should be read with the Securities and Exchange Board of India Act, 1992 and the class-specific regulations that apply to the intermediary concerned. The Regulations also appear in the site's related instruments for the Alternative Investment Funds Regulations, 2012, the takeover regulations of 2011 and the listing regulations, which together make up the securities regulation a business has to check.