The board of Securities and Exchange Board of India will meet on Monday to consider proposals to ease fund settlement norms for foreign portfolio investors (FPIs) and review regulatory reforms for market intermediaries, as part of efforts to enhance efficiency and transparency in capital markets.
A key proposal on the agenda is to allow FPIs to net funds for same-day equity cash market trades, instead of settling each transaction on a gross basis. The move would enable investors to offset purchase obligations with proceeds from same-day sales, requiring them to pay only the net amount.
At present, FPIs must fund each purchase transaction independently, even if they execute sale transactions on the same day. The proposed change is aimed at reducing funding requirements, lowering transaction costs and improving operational efficiency, particularly during high-volume periods such as index rebalancing.
The proposal is also expected to reduce foreign exchange-related costs arising from timing mismatches between inflows and outflows, addressing concerns raised by investors over the existing framework.
The meeting will be chaired by Sebi chairman Tuhin Kanta Pandey and will mark his fifth board meeting since assuming office in March 2025.
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Apart from FPI-related reforms, the board will deliberate on changes to the regulatory framework governing market intermediaries. This includes a review of
the “fit and proper person” criteria aimed at improving procedural clarity and fairness.
Under the proposed changes, the regulator may remove the initiation of winding-up proceedings as a disqualification, considering only a final order for such action while assessing eligibility. The move seeks to ensure that individuals and entities are not penalised prematurely during ongoing legal processes.
The board is also expected to formalise the right to a hearing in regulatory proceedings. While such an opportunity is currently provided in practice, its explicit inclusion in rules is intended to eliminate ambiguity and strengthen due process.
Further, the board will take up ease-of-doing business proposals concerning real estate investment trusts (REITs) and infrastructure investment trusts (InvITs), alongside a report by a high-level panel on conflict of interest and transparency.
The panel has proposed enhanced disclosures and a “zero-tolerance” approach to conflicts of interest involving senior officials, as part of broader governance reforms.
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