Archive · 4 Sep 2026
SEBI Proposes Net Settlement for Mutual Fund Cash Trades
SEBI wants mutual funds to have an easier way to manage money for some stock-market trades.
Today, a fund may need to pay for purchases separately even when it is also expecting money from sales.
The proposal would let an eligible fund combine those amounts during one settlement cycle.
For example, buying securities worth ₹100 crore and selling ₹90 crore could leave ₹10 crore to arrange.
This would apply only when the scheme buys or sells a security, not when it does both in the same cycle.
The securities themselves would still be delivered and settled normally.
Netting could happen only inside one mutual fund scheme, not between different schemes.
SEBI says the change could help during index changes and large investor deposits or withdrawals.
The regulator has asked stakeholders to submit comments by September 24.
SEBI proposed allowing mutual fund schemes to net eligible cash-market purchase and sale obligations within the same settlement cycle.
The proposal covers outright transactions through recognised stock exchanges, but excludes schemes that both buy and sell the same security in that cycle.
Securities, delivery-based obligations, Securities Transaction Tax and stamp duty would continue to be settled on a gross basis.
Netting would be permitted only within an individual scheme, not across schemes managed by the same asset management company.
SEBI said the proposal could reduce temporary liquidity needs during index rebalancing and periods of large subscriptions or redemptions; comments are invited by September 24.
- Who
- The Securities and Exchange Board of India, mutual fund schemes, asset management companies, custodians, clearing corporations, stock exchanges and the Association of Mutual Funds in India.
- What
- A proposal to allow scheme-level net settlement of eligible mutual fund cash-market fund obligations while retaining gross settlement for securities and certain related charges.
- When
- The consultation paper was issued on Thursday; stakeholder comments are invited until September 24. One article identifies the publication date as September 4, 2026.
- Where
- The proposal concerns mutual fund cash-market transactions executed through recognised stock exchanges in India.
- Why
- To improve settlement efficiency, ease temporary liquidity requirements and reduce operational inefficiencies and short-term funding needs.
- Eligible transactions
- Outright purchases or outright sales by a mutual fund scheme in the cash market through a recognised stock exchange.
- Netting period
- Eligible purchase and sale obligations could be offset within the same settlement cycle.
- Excluded trades
- Transactions in which the same scheme both buys and sells the same security during one settlement cycle would remain subject to gross settlement.
- Settlement treatment
- Securities and delivery-based obligations would continue to be settled on a gross, delivery-based basis; Securities Transaction Tax and stamp duty would also remain gross.
- Scheme boundary
- Netting would be allowed only at the individual scheme level and not across different schemes of the same mutual fund.
- Funding requirement
- Where eligible purchases exceed eligible sales, the scheme would settle the remaining amount; external funding would remain subject to existing mutual-fund borrowing rules.
- Safeguards and consultation
- The asset management company, mutual fund and custodian must protect scheme-wise accounting, valuation, daily NAV calculations, asset allocation, investment limits and unit-holder interests. Comments are due by September 24.
Sources
Sebi proposes net settlement of funds for mutual fund trades
SEBI proposes net settlement for mutual fund trades in cash market to ease liquidity strains
SEBI proposes to allow net settlement of outright transactions by mutual funds in the cash market
