Securities and Exchange Board of India (SEBI) has introduced a key change for Foreign Portfolio Investors (FPIs).
The regulator now allows FPIs to net their funds for same-day trades in the cash market.
In simple terms, investors can use money from shares they sell to fund purchases on the same day.
This move is expected to make trading smoother and reduce costs.
What Changes for Investors?
Earlier, FPIs had to settle each trade separately.
This meant:
Higher cash requirements
More funding costs
Losses due to currency fluctuations
Now, with netting allowed, they only need to settle the final difference (net amount) between buy and sell trades.
This becomes especially helpful during index rebalancing, when trading volumes are high and transactions increase sharply.
How the New System Works
Under the new rule, only certain transactions qualify.
Netting is allowed for “outright transactions”, which means:
Either a buy or a sell in a stock within a settlement cycle
But not both in the same stock during that cycle
If an investor both buys and sells the same stock in one cycle, those trades will not be netted.
They will continue under the old system.
Important Conditions to Know
There are a few key rules investors must keep in mind:
If purchases are higher than sales, the investor must pay the remaining amount
If sales are higher, the extra money cannot be used for other types of trades
Only eligible transactions will be considered for netting
Also, while funds can be netted, securities will still be settled separately (on a gross basis).
Taxes and Charges Stay the Same
Even with this change, existing charges will continue.
Taxes like:
Securities Transaction Tax (STT)
Stamp duty
will still be applied as usual on each transaction.
When Will This Start?
SEBI has said the new system will be implemented on or before December 31, 2026.
The Bottom Line
This move by SEBI is aimed at making life easier for foreign investors.
By reducing the need for large upfront funds and cutting costs, it could improve market efficiency—especially during high-volume trading periods.
For FPIs, it means simpler operations and better use of capital.
