Archive · 8 Jan 2026
SEBI, Exchanges Develop Net Settlement for ETFs
The Securities and Exchange Board of India (SEBI) and other financial organizations are working on a new system for exchange-traded funds (ETFs).
This system, called net settlement, will help market makers who buy and sell ETFs.
Right now, market makers have to guess how many ETF units they will need to deliver, which can be risky because prices can change during the day.
This new system will let them settle only the net position, which means they won't have to worry about price changes as much.
This should make trading ETFs cheaper and easier.
However, setting up this system requires changes to the current systems used by exchanges and clearing corporations, and it's still a work in progress.
SEBI and stock exchanges are developing a net settlement mechanism for ETFs to reduce price risk for market makers.
Current system exposes market makers to intraday price risk due to estimation of demand.
Net settlement would consolidate offsetting buy and sell orders, reducing operational uncertainty.
Implementation requires system changes at exchanges and clearing corporations.
SEBI is supportive but allowing industry participants to build consensus and execution capability.
- Who
- SEBI, stock exchanges, clearing corporations, AMFI, market makers
- What
- Development of a net settlement mechanism for ETFs
- When
- January 7, 2026
- Where
- India
- Why
- To reduce price risk and lower the cost of providing liquidity for market makers
- Organizations Involved
- SEBI, Stock Exchanges, Clearing Corporations, AMFI
- Current System Issue
- Market makers face intraday price risk
- Proposed Solution
- Net settlement mechanism for ETFs
- Expected Benefits
- Reduced price risk, lower liquidity costs
- Implementation Status
- In progress, timelines fluid
- Key Challenge
- System changes at exchanges and clearing corporations
- Date
- January 7, 2026
