SEBI proposes net settlement of cash market trades for mutual funds

BENGALURU: India’s market regulator on Thursday proposed allowing mutual fund schemes to settle cash market trades on a net basis, a move aimed at reducing funding requirements and improving settlement efficiency. The proposal would extend to domestic mutual funds a facility that the Securities and Exchange Board of India (SEBI) already permitted for foreign portfolio investors earlier this year. SEBI said the proposal is intended to improve settlement efficiency and reduce temporary liquidity requirements for mutual fund schemes. Why India’s market regulator barred a JPMorgan entity from the country’s securities market Under the proposal, net settlement of funds would be permitted only at the level of an individual mutual fund scheme. SEBI said the transactions eligible for net settlement have to be either a sale or purchase in a security, but not both.