SEBI Clarifies Netting Rules For FPI Transactions In Cash Market

The Securities and Exchange Board of India (SEBI) has issued clarifications on its proposal to permit netting of funds for outright buy and sell transactions by FPIs in the cash market. While the reform aims to streamline settlement obligations, SEBI has specified that intra-day trades in the same securities will not qualify for netting. This ensures that speculative intra-day activity remains outside the scope of the proposed framework.  

Furthermore, SEBI confirmed that Securities Transaction Tax (STT) and stamp duty will continue to be charged on a delivery basis for eligible transactions. The move balances operational efficiency with regulatory safeguards, maintaining revenue streams while encouraging greater participation from global investors.  

Key highlights from the announcement include  

• Intra-day transactions in the same securities excluded from netting.  
• Netting permitted only for outright buy and sell trades by FPIs.  
• STT and stamp duty to remain applicable on delivery basis.  
• Proposal aims to streamline settlement obligations and reduce fund requirements.  
• Measure expected to enhance efficiency while preserving regulatory oversight.  
• Industry experts view the clarification as a step toward balanced market reforms.  

The clarification underscores SEBI’s intent to modernize India’s capital markets while ensuring that reforms do not compromise regulatory integrity. By refining the scope of netting, SEBI seeks to attract foreign investment while safeguarding transparency and compliance.  

Sources: Reuters, SEBI Consultation Paper, Economic Times