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Sebi Eyes Netted FPI Trade Settlements
16 Jan
Summary
- Sebi proposes allowing FPIs to net same-day buy/sell cash obligations.
- This aims to lower funding costs and improve efficiency for investors.
- Consultation paper open for feedback until February 6.
The Securities and Exchange Board of India (Sebi) is considering a new framework that would permit Foreign Portfolio Investors (FPIs) to net their cash obligations for same-day buy and sell transactions in the stock market. Currently, FPIs must settle trades on a gross basis, leading to higher temporary liquidity requirements and associated costs, especially during volatile periods.
The proposed change aims to alleviate this funding stress by allowing sale proceeds to offset purchase obligations, requiring FPIs to fund only the net amount. This initiative comes amid substantial selling by foreign investors observed over the past year.
Sebi has released a consultation paper outlining the proposal, inviting public comments until February 6. While acknowledging potential risks like increased trade rejections, the regulator highlighted existing safeguards and stated that securities settlement would remain on a gross delivery basis.
