SEBI plans net settlement of MF cash market trades
BusinessLine 3 hrs ago·3 Sept 2026, 1:30 pm
The Securities and Exchange Board of India (SEBI) is proposing a new framework to simplify how mutual funds settle trades in the cash market. Under the current system, every purchase and sale must be settled separately, which ties up capital in the process. The proposed change would allow mutual funds to net these trades, meaning they can offset a purchase against a sale for the same security within a single settlement cycle.
This move is significant because it aims to reduce the amount of cash that mutual funds need to keep aside for settlement. By freeing up this locked-in capital, funds can potentially deploy more money into new investments, which may help improve returns for investors. It also simplifies the operational process for fund houses.
Investors should watch for the final guidelines from SEBI. While this is a structural improvement, it does not directly change the fund's investment strategy. However, a smoother settlement process could lead to more efficient fund management and better liquidity handling in the long run.
Excerpt from BusinessLine
The capital markets regulator SEBI has proposed to allow mutual fund schemes to net their fund obligations arising from certain cash-market transactions, a move aimed at reducing temporary liquidity requirements and improving settlement efficiency. Under the consultation paper issued on Thursday, SEBI has invited…Read the original at BusinessLine
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