- SEBI approved net settlement of FPI equity trades to reduce funding costs by Dec 31, 2026
- New rules also allow InvITs to hold SPV investments post-concession with a one-year exit or reinvestment
- SEBI proposed stricter fit and proper norms, removing winding-up initiation as disqualification
The Securities and Exchange Board of India, in its boar dmeeting on Monday, has cleared proposal for net settlement of transactions for FPIs.
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 cleared proposal 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.
Given the necessary system and process modification the proposal shall be implemented on or before Dec. 31, 2026.
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.
It has also approved measures to enhance ease of doing business for Real Estate Investment Trust and Infrastructure Investment Trust. Under the new changes InvITs will be permitted to continue to hold investment in SPVs post conclusion or termination of the concession agreement. However, InviTs will have to exit the investments in such SPV or get new infrastructure project withing one year from completion of concession agreement or conclusion of pending claims or litigations or completion of defence liability period.
Privately listed InvITs permitted to invest upto 10% of asset value in Greenfield infrastructure projects and InvITs with 49-70% leverage will be allowed to avail fresh borrowings for capital expenditure.
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The market watchdog further proposed tighter ‘Fit and Proper' norms and expands scrutiny of Key Personnel. Under this, SEBI is considering a proposal to abolish the reference to initiation of winding-up proceedings as a disqualification in a bid to ensure that only a final winding-up order, and not mere initiation of proceedings, is considered while assessing whether a person is fit and proper.
Also, the regulator is looking to explicitly include the right to a hearing in the rules. Although the practice of giving a reasonable opportunity of being heard already exists, it has been proposed to be clearly stated in the rules to remove any procedural ambiguity.
There will now be higher disclosure bar as regulator proposes tougher conflict‑of‑interest rules.
SEBI has also increased flexibility to AIFs in scheme winding up. It has also approved to introduce a framework for tagging certain AIFs as 'inoperative funds' with lighter compliance requirements till surrender of the their registration certificate. Under the framework, AIFs are required to distribute the liquidation proceeds to investors within the permissible fund life. In addition they will have to achieve a nil bank account balance before surrendering their certificate.
SEBI has also approved reduction to the minimum value of investment by individual investors in Social Impact Fund of AIF to Rs 1,000 from the existing Rs 2 lakh.
This will be the fifth board meeting chaired by SEBI Chairman Tuhin Kanta Pandey since he assumed office on March 1, 2025.
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