The Securities and Exchange Board of India on Friday proposed a change that would allow large foreign investors to settle only the net value of their trades instead of each transaction separately.
The move, which has been long-awaited, is expected to reduce costs and make Indian markets more attractive to overseas investors. Sebi announced the release of its consultation paper earlier this morning.
The markets regulator has sought the changes “in order to enhance operational efficiency and reduce cost of funding” for foreign portfolio investors, it said in a consultation paper.
Currently, FPIs have to settle every buy and sell order separately, even if they trade the same stock on the same day. This means investors must fully fund every purchase and delivery shares for each sale, which raises funding needs and transaction costs.
Allowing netting would ease this burden for large global investors and could help draw more institutional capital into Indian markets.
