What is Sebi proposing for FPI trades?

Sebi is proposing to allow FPIs to net their cash obligations for same-day buy and sell trades, reducing the need to fund full amounts separately.

How will Sebi's proposal benefit FPIs?

The proposal aims to lower funding costs and improve operational efficiency for FPIs, especially during high-volume trading days.

When is the deadline for public comments on Sebi's FPI proposal?

Public comments on Sebi's proposal for netting FPI trades are due by February 6.

Home / Business and Economy / Sebi Eyes Netted FPI Trade Settlements

Sebi Eyes Netted FPI Trade Settlements

16 Jan

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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.