Securities and Exchange Board of India’s (SEBI) proposal for a Specialised Digital Platform (SDP) to monitor content related to financial services could affect user activity and muzzle free speech, experts told businessline.
In November, the market regulator came out with a consultation paper that suggested online platforms register as SDPs and use Artificial Intelligence (AI) and Machine Learning (ML) technology to curb unregulated financial advice or claims.
On December 4, it also clarified that such a registration is not mandatory and that platforms can volunteer for such recognition.
Regardless of the obligation, legal experts and industry bodies raised concerns about the idea of using AI to monitor content.
“The bigger impact is on user free speech because the capability of AI solutions to make nuanced determinations of legality is unproven and honestly doubtful at the current level of technology. SEBI regulations bar unregistered entities from making buy-sell recommendations but permits general investor education content. Will an AI tool be able to make this nuanced evaluation with a high degree of reliability?” said Aman Taneja, Partner at Ikigai Law.
Building on the question of nuance, Ashish Aggarwal, Head of Public Policy at NASSCOM said that the use of AI/ML to detect copyright violation is feasible, but may not work well for investment advice.
“How do you identify something like an investment advice, not to mention whether it is in accordance with what is permitted? AI and ML are probabilistic technologies and not deterministic. The extent of false positives and ensuing claims and counter claims need to be considered. Imagine every regulator coming up with something like this. How are digital platforms expected to take responsibility and decide which user generated content violates all of the laws and regulations across these domains?” he added.
Following the announcement of the news, critics have been saying that the proposal will particularly impact influencers on social media and other platforms, who provide financial advice on social media. Contrary to this view, Gangesh Varma, lawyer at Saraf and Partners, said that SDP registrations could potentially build more trust towards influencers instead.
“There are certain dedicated platforms that provide financial advice and are platforms that people go to for these kinds of content. I think there is an element of trust that users can now expect when they are looking at a very dedicated platform that is already approved and connected to your service provider. However. I also feel that there might be a trend towards legitimising certain kinds of information sharing or educational activities, and distinguishing this kind of general learning from specific investment advice.”
