Unveiling SEBI's New Settlement Mechanism for Foreign Portfolio Investors

SEBI's New Settlement Mechanism for FPIs

The Securities and Exchange Board of India (SEBI) introduces a new settlement mechanism for foreign portfolio investors (FPIs), expected to deliver efficiency gains of approximately Rs 2,000 crore per annum. This change addresses delays in access to sale proceeds previously faced by FPIs, aligning them with domestic institutional investors.

Efficiency Gains and Tax Clearance

Under the revamped system initiated on September 9, 2024, tax certificates for FPI sale trades executed on T day are now issued by tax consultants by 9 am India time on T+1 day. This adjustment significantly promotes operational efficiency.

Collaboration for Improvement

SEBI engaged with various stakeholders including FPIs, clearing corporations, custodians, and tax consultants to refine processes. This collaborative approach has resulted in making sale proceeds accessible on the settlement day.

• Capital market regulator raised position limits for trading members in index Futures & Options contracts to 15% of the total open interest (OI).
• The position limits are governed under SEBI's Master Circular, specifying the higher limit at Rs 500 crore or 15% of total OI.
• Dynamic monitoring of equity derivatives segment based on total open interest from the prior day's trades.

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