India regulator proposes new 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 proposed overhaul is part of wide-ranging reforms planned by the regulator to attract foreign investors, including making the country’s markets deeper and making registrations faster, chairman Tuhin Kanta Pandey said at an event earlier in the day.

The Securities and Exchange Board of India (SEBI) said the proposal aims to improve efficiency and cut funding costs for foreign portfolio investors, according to a consultation paper.

SEBI would allow net settlement across two or more stocks, benefiting exchange-traded and index funds. The mechanism would not apply to single-stock intraday transactions.

Foreign investors often execute multiple buy and sell trades in a day and must currently settle each transaction. Settling only the net value, called “netting” in market parlance, would allow those trades to be offset so only the net value is paid, reducing costs and funding requirements.

The proposal comes as foreign outflows from India accelerate amid steep U.S. tariffs, weak earnings and high equity valuations.