Securities and Exchange Board of India (SEBI) is set for a pivotal board meeting on Monday, with a reform-heavy agenda that could reshape how foreign investors and market intermediaries operate in the country. At the centre of the discussions is a proposal to ease fund settlement norms for Foreign Portfolio Investors (FPIs) and changes to regulatory frameworks for market intermediaries, news agency PTI reported.
Currently, FPIs must settle equity cash market trades on a gross basis, meaning each buy transaction is funded independently, even if offset by same-day sales.
SEBI weighs FPI fund netting to cut costs
SEBI is now considering allowing “netting of funds”, enabling investors to offset buy and sell positions within the same trading day and settle only the net payable amount, the report further stated.
The move is expected to significantly improve operational efficiency while reducing funding costs, particularly during high-volume periods such as index rebalancing. It could also help minimise foreign exchange costs that arise from timing mismatches between inflows and outflows. Market participants have long argued that the existing framework forces FPIs to arrange additional funds for at least an extra day, increasing transaction costs and complexity.
The meeting, the fifth under SEBI Chairman Tuhin Kanta Pandey since he took charge in March 2025, will also examine broader governance reforms.
Governance overhaul on table
Among the suggested changes is the removal of the initiation of winding-up proceedings as an automatic disqualification. Instead, only a final winding-up order would be considered while assessing eligibility, a shift aimed at preventing premature or unjust exclusions. According to the PTI report, SEBI is also looking to formally codify the right to a hearing in its rules, making explicit a practice that already exists but lacks clear regulatory articulation.
In addition, the board will deliberate on ease-of-doing-business measures for real estate investment trusts (REITs) and infrastructure investment trusts (InvITs), sectors seen as crucial for channeling long-term capital into infrastructure and real estate, the news agency reported.
Another significant item on the agenda is a report by a high-level panel on conflict of interest and transparency within SEBI. The panel has recommended sweeping reforms, including enhanced disclosure norms and a stricter, “zero-tolerance” approach to conflicts involving senior officials.