SEBI proposes net settlement of cash market trades for mutual funds
- SEBI proposes net settlement for mutual funds to boost efficiency and cut funding needs, a facility already extended to foreign investors
BENGALURU: India’s market regulator on Thursday proposed allowing mutual fund schemes to settle cash market trades on a net basis, a move aimed at reducing funding requirements and improving settlement efficiency.
The proposal would extend to domestic mutual funds a facility that the Securities and Exchange Board of India (SEBI) already permitted for foreign portfolio investors earlier this year.
SEBI said the proposal is intended to improve settlement efficiency and reduce temporary liquidity requirements for mutual fund schemes.
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Under the proposal, net settlement of funds would be permitted only at the level of an individual mutual fund scheme.
SEBI said the transactions eligible for net settlement have to be either a sale or purchase in a security, but not both.