Sebi board to review FPI settlement easing, intermediary reforms

The board of Securities and Exchange Board of India (Sebi) is scheduled to meet on Monday to consider key reforms aimed at improving market efficiency, including easing settlement norms for Foreign Portfolio Investors (FPIs) and revising rules for market intermediaries.

A major proposal under consideration is allowing FPIs to net funds for same-day cash market trades. At present, FPIs are required to settle trades on a gross basis, meaning each purchase must be funded separately, regardless of same-day sales. The proposed change would enable investors to offset purchase obligations against sale proceeds, requiring payment of only the net amount.

The move is expected to reduce funding costs, improve operational efficiency, and minimise forex-related expenses caused by timing mismatches. It also addresses concerns that the current system forces FPIs to arrange additional funds for at least one extra day, increasing transaction costs, particularly during index rebalancing.

The meeting will be chaired by Sebi Chairman Tuhin Kanta Pandey and will also review broader governance reforms. These include revisiting the “fit and proper person” criteria for intermediaries to ensure greater clarity and fairness.

Among the proposed changes is removing the disqualification linked to the mere initiation of winding-up proceedings, limiting it instead to final orders. Sebi is also considering explicitly providing the right to a hearing in its rules to eliminate procedural ambiguity. The board will further discuss ease-of-doing business measures for REITs and InvITs, along with a high-level panel report recommending stricter transparency norms and a zero-tolerance approach to conflicts of interest among top officials.