Sebi proposes net fund settlement for mutual fund cash-market trades
Economic Times 1 hr ago·3 Sept 2026, 12:20 pm
The Securities and Exchange Board of India (Sebi) has proposed a new rule allowing mutual funds to settle cash-market trades on a net basis. Currently, funds must settle every single transaction separately, which can create a significant cash crunch. This new framework would allow them to offset gains against losses, settling only the final balance. This change is expected to improve the efficiency of fund operations and reduce the need for external borrowing to manage daily liquidity.
This regulatory shift is particularly relevant for large-scale market events like index rebalancing or periods of heavy buying and selling. By lowering the cash required for settlement, mutual funds can operate more flexibly without draining their resources. For investors, this could mean smoother operations and potentially lower costs for fund houses, though the direct impact on individual returns remains to be seen.
Investors should watch for the final implementation timeline and the specific eligibility criteria for funds. While the move aims to streamline the system, it is primarily a structural change for the fund management industry. Keeping an eye on how this rule is rolled out will help investors understand its long-term implications for the mutual fund ecosystem.
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