Market infrastructure institutions and intermediaries are increasingly leveraging AI to drive innovations such as real-time risk analytics, algorithmic trading, faster settlements, and streamlined IPO processing. These developments are transforming market operations and unlocking new opportunities for innovation, efficiency, and inclusivity. In this evolving landscape, India is making notable progress by embracing AI and digital transformation to drive capital market growth while addressing unique risks. India’s progress is evidenced by its introduction of T+0 settlement times, exploration of responsible AI adoption, and a push for retail participation in algorithmic trading.
Capital markets across the globe are being reshaped by technological advancements, particularly artificial intelligence (AI)
A key trend is the convergence of AI with other emerging technologies like agentic AI, edge computing, and quantum computing, driving greater resilience, and sustainability. From regulatory advancements to AI-driven Regulatory Technology (RegTech) and Supervisory Technology (SupTech) tools, India’s capital markets are automating processes, enhancing market surveillance, and offering hyper-personalised services. These efforts empower investors, particularly retail investors, by making markets more accessible, transparent, and secure.
The integration of AI into risk management strategies is also crucial, with AI-powered solutions providing real-time insights into market risks, fraud detection, and regulatory compliance. Although challenges such as data bias, hallucination, privacy risks, and security vulnerabilities persist, a strong focus on cyber and operational risk management, supported by robust IT governance, helps build resilience and maintain investor trust. In this environment, risks also present opportunities to drive innovation and create lasting value through a strategic approach.
The Government of India and regulators, including the Securities and Exchange Board of India (SEBI), are playing a pivotal role in this transformation. By promoting responsible AI adoption and fostering innovation while focusing on market stability, regulators are balancing progress with safeguards. This is witnessed by enactment of relevant laws and regulations, issued guidelines, and enhancement of regulatory capabilities to address concerns around data protection, AI transparency, and ethical use.
A crucial aspect of this transformation is empowering individual investors to become self-reliant (Aatmanirbhar) in navigating the evolving financial landscape. AI-powered platforms and personalised investment tools enable investors to make informed, data-driven decisions aligned with their financial goals and risk appetites. Coupled with educational initiatives, the widespread adoption of AI tools will equip investors with the knowledge needed to navigate modern financial markets with confidence.
AI is also fostering equitable growth by welcoming new market participants such as fintech startups, tech providers, and retail investors, and is also enhancing collaboration amongst institutions. This integration symbolises a core shift powered by the democratisation of financial tools, improved information access, and the rise of collaborative ecosystems.
By fostering innovation, enhancing transparency, and promoting financial assimilation, the advancements in India’s capital markets are shaping a future that is more dynamic, resilient, and inclusive, setting an example for the world. The recommendations in this paper aim to empower all stakeholders, including MIIs, intermediaries, regulators, and investors, to harness these advancements and pave the way for a robust financial ecosystem aligned to the vision of ‘Viksit Bharat @2047’, ultimately fostering a more self-reliant investor base in India.
Reimagine CapTech and the future of capital markets
KPMG in India, in collaboration with CDSL, invites you to step into an era reimagined by the innovative evolution of CapTech
How can KPMG in India help
Key Contacts
Kunal Pande
National Leader - Digital Trust for Financial Services Sector, National Co-Head - Digital Risk and Cyber
KPMG in India
Access our latest insights on Apple or Android devices
