Sebi proposes net settlement of funds for mutual fund trades
Mint 1 hr ago·3 Sept 2026, 12:14 pm
Sebi has proposed a new rule requiring mutual funds to settle trades using their own cash balances instead of borrowing funds from banks. This 'net settlement' mechanism would allow funds to net out their total inflows and outflows for a single day, rather than settling every transaction individually.
This change is significant for investors as it aims to reduce the temporary liquidity pressure on fund houses. By lowering the need for short-term borrowing, the proposal seeks to make the fund management process more efficient and reduce operational costs, which could eventually benefit the overall stability of the market.
Investors should watch for the final implementation timeline and any specific guidelines Sebi releases. This move is expected to streamline the mutual fund industry, but its full impact on daily NAV fluctuations and fund performance will depend on how effectively fund houses adapt to the new settlement cycle.
Excerpt from Mint
Sebi's proposal aims to reduce temporary liquidity requirements and improving settlement efficiency for mutual fund schemes The Securities and Exchange Board of India (Sebi) has proposed allowing mutual fund schemes to settle cash obligations from stock-market transactions on a net basis, while keeping settlement of…Read the original at Mint
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