Kamal Ghorui
The Securities and Exchange Board of India (Sebi) board will meet on Monday to deliberate on a wide-ranging agenda that includes a proposal to ease fund settlement norms for foreign portfolio investors (FPIs) and changes to regulatory frameworks governing market intermediaries, people familiar with the matter told news agency PTI.A key proposal before the board is to allow FPIs to net funds for same-day cash market trades instead of settling each transaction individually. Under the existing framework, FPIs are required to settle equity cash market trades on a gross basis, funding each purchase transaction independently of sale transactions even if both occur on the same day.Sebi has proposed permitting “netting of funds”, which would enable FPIs to use proceeds from same-day sales to offset purchase obligations, requiring them to meet only the net payable amount. The move is aimed at improving operational efficiency and reducing the cost of funding for FPIs, particularly on index rebalancing days. It is also expected to help minimise forex-related costs arising from timing mismatches between inflows and outflows.The proposal follows concerns that the current gross settlement mechanism imposes additional funding requirements on FPIs for at least one extra day, thereby increasing transaction costs.This will be the fifth board meeting chaired by Sebi Chairman Tuhin Kanta Pandey since he assumed office on March 1, 2025.Apart from FPI-related reforms, the board will review several governance and regulatory proposals, including a comprehensive overhaul of the “fit and proper person” criteria applicable to market intermediaries. The aim is to enhance procedural clarity and fairness, the people said.As part of the proposed changes, Sebi is considering abolishing the reference to initiation of winding-up proceedings as a disqualification, so that only a final winding-up order is taken into account while assessing whether a person is fit and proper.The regulator is also looking to explicitly include the right to a hearing in the rules. While the practice of providing a reasonable opportunity of being heard already exists, the proposal seeks to formally codify this provision to remove procedural ambiguity.In addition, the board is expected to consider ease-of-doing business proposals relating to real estate investment trusts (REITs) and infrastructure investment trusts (InvITs).Another key agenda item is the discussion of a report submitted by a high-level panel on conflict of interest and transparency. The panel has proposed wide-ranging reforms aimed at enhancing disclosure norms and fostering a “zero-tolerance” culture to address potential conflicts of interest involving top Sebi officials, they added.
