Sebi proposes trade settlement mechanism to cut costs for offshore funds

India's markets regulator on Friday proposed allowing large foreign investors ‍to settle ​only the net value of their trades instead of each transaction, a long-awaited reform aimed at cutting costs and attracting overseas investors.

The Securities and Exchange Board of India ​has sought the changes "in order to enhance operational efficiency and reduce cost of funding" for foreign portfolio investors (FPIs), it said in a consultation paper.

FPIs often execute multiple buy-and-sell trades in a day and have to settle each transaction separately. Settling only the net value, called "netting" in market parlance, would allow those trades to be offset so only the net position ‌is settled, reducing costs and funding ​requirements.

 

The proposal comes at a time when foreign outflows from India have accelerated, weighed down by steep U.S. tariffs, ‍muted corporate earnings, and elevated equity valuations.

The regulator is planning wide-ranging reforms aimed ‍at ‌attracting foreign investors, ​including making the ‍country's markets deeper and making registrations faster.