Source: BS
Context:
The Securities and Exchange Board of India (Sebi) Chairman Tuhin Kanta Pandey said the regulator is examining whether foreign portfolio investors (FPIs) can be allowed to net their settlements for trades executed within the same day, a move that would mark a major shift from the current trade-wise settlement regime.
Settlement Netting for FPIs
Current Regime
- Foreign Portfolio Investors (FPIs) are required to give and take delivery for every trade.
- This trade-wise settlement increases operational complexity and costs.
Proposed Change
- Sebi is examining the possibility of netting settlements for trades executed on the same day.
- Netting would allow FPIs to settle the net difference rather than every individual trade, easing operational convenience and reducing costs.
Related Reforms
- Digital FPI Registration
- End-to-end paperless system with digital signatures.
- Expected to reduce registration timelines from months to days.
- SWAGAT-FI Category
- Fast-track route for trusted foreign institutions.
- May allow investments via other FEMA-approved routes without extra compliance.
- Discussions ongoing with RBI and Finance Ministry.
- Market Development Measures
- Review of short selling and securities lending/borrowing to strengthen cash-derivatives linkages.
- Introduction of a closing auction session to improve price discovery.
- Promotion of corporate bond market and retail participation.
- Facilitating institutional participation in commodities markets with robust risk controls.
