SEBI to Examine Relaxation of FPI Settlement Norms and Intermediary Reforms at Upcoming Board Meeting

Securities and Exchange Board of India (Sebi) Board Meeting Agenda

Key Highlights

• The Sebi board will meet on Monday to discuss a wide-ranging agenda, including proposals to ease fund settlement norms for Foreign Portfolio Investors (FPIs) and changes to regulatory frameworks for market intermediaries.
• A key proposal is to allow FPIs to net funds for same-day cash market trades, reducing the cost of funding and minimising forex-related costs.

Proposal to Ease FPI Settlement Norms

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• The current framework requires FPIs to settle equity cash market trades on a gross basis, funding each purchase transaction independently of any sale transactions.
• Sebi has proposed permitting "netting of funds", allowing FPIs to use proceeds from same-day sales to offset purchase obligations, reducing the net payable amount.
• This move aims to enhance operational efficiency and reduce transaction costs, especially on index rebalancing days.

Leadership and Governance Reforms

• This will be the fifth board meeting chaired by Sebi Chairman Tuhin Kanta Pandey, who assumed office on March 1, 2025.
• The board will review governance and regulatory proposals, including a comprehensive overhaul of the "fit and proper person" criteria for market intermediaries.

Push for Transparency and Ease of Doing Business

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• Sebi is considering a proposal to abolish the reference to initiation of winding-up proceedings as a disqualification, ensuring that only a final winding-up order is considered.
• The regulator will also discuss ease-of-doing business proposals related to Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs).

Conflict of Interest and Transparency

• The board will discuss a report submitted by a high-level panel on conflict of interest and transparency, proposing comprehensive reforms to bring in transparency through greater disclosure and a "zero-tolerance" culture.