Sebi proposes FPI netting, KYC reforms

ting each other.

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Under the proposed system, buy trades would depend on sell trades being confirmed correctly.

(BLOOMBERG)

For example, an FPI that buys shares worth 3100 crore and sells shares worth the same amount on a single day must still arrange 3100 crore to meet its purchase obligation. This leaves the investor underinvested by that amount for at least a day, even though sale proceeds would offset the purchase.‘The proposal only addresses outright transactions—where an FPI either buys or sells a security, but does not do both in a particular settlement cycle. Settlement of intra-day transactions in one security would still be done on a gross basis.

The move is expected to reduce funding costs for FPIs, particularly on index rebalancing days, when large buy and sell orders are executed in stocks entering or exiting an index. At the same time, by continuing to confirm non-outright transactions on a gross basis, Sebi aims to limit the risk of FPIs influencing markets through large positions.