Mumbai, April 24: The Securities and Exchange Board of India (SEBI) has granted foreign portfolio investors (FPI) the ability to net funds in same-day cash market trades. This decision, announced on Friday, aims to streamline operations and reduce costs, particularly during index rebalancing periods.
Under the new regulations, FPIs can now utilize the proceeds from the sale of shares completed on the same day for purchases made on that day. This means they will only need to pay the net amount rather than settling each transaction separately.
Previously, FPIs were required to make full payments for each trade, leading to increased capital requirements, higher costs, and potential losses in foreign exchange.
Market participants have long expressed concerns about this issue, especially during high trading volumes associated with index rebalancing, which complicates operations.
SEBI has stated that this new system will be implemented by December 31, 2026. The regulator clarified that this facility will only apply to outright transactions, meaning when only buying or selling occurs for a single security.
If both buying and selling happen simultaneously for the same security, the old settlement method will still apply. Furthermore, if the sale proceeds are less than the purchase amount, the remaining balance must be covered by the FPI. Conversely, if the sale proceeds exceed the purchase amount, the excess funds cannot be used to adjust for other purchases.
It is important to note that while funds can be netted, the settlement of shares will continue to occur on a gross basis. Additionally, taxes such as Securities Transaction Tax (STT) and stamp duty will remain unchanged.
My name is Narendra Jijhontiya. I am an experienced content writer with several years of expertise in the field. Currently, I contribute to Daily Kiran, creating engaging and informative content across a variety of categories including TECHNOLOGY, health, travel, education, and automobiles. My goal is to deliver accurate, insightful, and captivating information through my words to help readers stay informed and empowered.
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