Sebi to review key regulatory reforms today

New Delhi: Markets regulator Sebi board is set to meet on Monday to deliberate on a wide-ranging agenda, including a proposal to ease fund settlement norms for foreign portfolio investors (FPIs), and changes to regulatory frameworks for market intermediaries, people familiar with the matter said.

A key item on the agenda is a proposal to allow Foreign Portfolio Investors (FPIs) to net funds for same-day cash market trades, instead of settling each trade individually.

Under the existing framework, an FPI needs to settle equity cash market trades on a gross basis, funding each purchase transaction independently of any sale transactions, even on the same day. Sebi has proposed permitting “netting of funds”, which would allow FPIs to use proceeds from same-day sales to offset purchase obligations, thereby requiring them to meet only the net payable amount.

The move is aimed at enhancing operational efficiency and reducing the cost of funding for them, especially on index rebalancing days. Also, it is expected to minimise forex-related costs arising from timing mismatches between inflows and outflows.

The proposal follows concerns that the current gross settlement system imposes additional funding requirements on FPIs for at least one extra day, increasing transaction costs. This will be the fifth board meeting chaired by Sebi Chairman Tuhin Kanta Pandey since he assumed office on March 1, 2025.