Compliance Note: SEBI Rules & Ethical AI Reminders

AI can be a powerful research tool.

But when it comes to stock markets, compliance is non-negotiable.

In India, the Securities and Exchange Board of India (SEBI) regulates how advice and recommendations can be given. That means anyone using AI screeners must be careful about where the line is drawn between research and advice.

SEBI’s Role

SEBI protects investors from misleading or unverified tips.

It sets clear boundaries - only SEBI-registered Research Analysts (RAs) or Investment Advisors (IAs) can legally give stock recommendations.

If you’re using AI screeners, they can generate shortlists — but these are not buy or sell calls. They are starting points for your own research.

What You Can Do with AI Screeners

• Use them to filter large data into manageable shortlists.
  
• Study companies more deeply after AI flags them.
  
• Learn how fundamentals and technicals interact.
  

This keeps the screener as a learning and research tool, not a tip-generator.

What You Cannot Do

• Treat AI output as guaranteed investment advice.
• Share AI-generated shortlists publicly as “recommendations.”
• Skip cross-checking with official sources like exchange filings.

For example: if AI says “These 5 auto stocks look strong,” you cannot take that as a trading signal. You need to check the companies’ financials, market news, and disclosures before making any move.

Ethical AI Use

• Transparency: Always mention that AI results are based on prompts, not insider information.
• Cross-verification: Never rely on AI output without double-checking from reliable sources.
• No shortcuts: Avoid using vague prompts like “Which stock will double next year?” That’s speculation, not screening.

Example

Suppose your screener outputs: “Banking stocks with NPAs under 2% and trading above 200-DMA.”

Ethical use: You take this shortlist, read company annual reports, compare ratios, and decide whether to study further.

Unethical use: You forward this list on WhatsApp as a “must-buy” tip without disclaimers.

The first keeps you compliant. The second can get you in trouble under SEBI rules.

Final Takeaway

AI is a tool, not an advisor.

It can help you learn, research, and filter faster — but it cannot and should not replace human judgment or compliance.

Always treat screener outputs as educational research aids.

Check them against SEBI-regulated sources, company disclosures, and your own analysis before acting.

Remember: using AI ethically not only keeps you compliant, it also makes you a smarter, more responsible investor.