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Informist, Friday, Apr. 24, 2026

 

--SEBI releases circular to allow net settlement of funds by FPIs in cash mkt 

--SEBI to allow net settlement of funds by FPIs in cash mkt before Dec 31

 

MUMBAI – The Securities and Exchange Board of India will allow net settlement of funds for transactions done by foreign portfolio investors in the cash market. The new rules will come into effect on or before Dec. 31, the regulator said in a circular.

 

According to the new rules, transactions that involve only outright sale or purchase can be settled on a net basis. Transactions that involve both buying and selling of a security will continue to be settled on a gross basis.

 

Earlier, all transactions by FPIs in the cash market were settled on a gross basis. This was done to prevent these investors from indulging in day trading.

 

"Representations were received from market participants highlighting that the gross settlement of transactions results in additional liquidity requirements, increased funding costs due to forex (foreign exchange rate) slippage and operational inefficiency for FPIs, particularly during days of index rebalancing," SEBI said in the circular.

 

The regulator approved the rule change for FPI transactions at its board meeting in March. A consultation paper on the subject had been floated in January.  End

 

Reported by Anshul Choudhary

Edited by Rajeev Pai

 

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