SEBI amends FPI norms; permits net settlement for outright cash trades
SEBI allows Foreign Portfolio Investors to net settle funds for outright cash trades by December 31, 2026, while mixed buy-sell trades remain on a gross basis.Summary
The Securities and Exchange Board of India (SEBI) has amended its regulations to permit Foreign Portfolio Investors (FPIs) to settle funds on a net basis for outright cash market transactions. This change, effective by December 31, 2026, allows custodians to net settle funds for either a purchase or a sale transaction in a security during a settlement cycle, aiming to reduce liquidity requirements and improve operational efficiency. However, transactions involving both purchases and sales in the same security within a settlement cycle will continue to be settled on a gross basis. SEBI stated that this move addresses industry feedback regarding higher funding costs and operational challenges under the existing gross settlement system, particularly during events like index rebalancing. Settlement of securities between FPIs and custodians, as well as statutory levies like Securities Transaction Tax (STT) and stamp duty, will remain unchanged.
(Source：Cnbctv18)