Sebi allows net settlement of funds for FPIs
Sebi permits Foreign Portfolio Investors to net fund settlements for same-day cash market trades to enhance efficiency and reduce costs.Summary
The Securities and Exchange Board of India (Sebi) has announced a new framework allowing Foreign Portfolio Investors (FPIs) to net settle funds for same-day cash market trades, effective by December 31, 2026. This move aims to enhance operational efficiency and reduce funding costs, particularly during index rebalancing days. Currently, FPIs settle transactions on a gross basis, which incurs additional costs. The new rule permits netting by using proceeds from sale transactions to fund purchase transactions on the same day, thereby fulfilling only the net fund obligation. However, transactions involving both purchases and sales within a settlement cycle will remain settled on a gross basis. Sebi clarified that settlement of securities, Securities Transaction Tax (STT), and stamp duty will continue to be levied on a delivery basis.
(Source：The Week)