SEBI proposes netting settlement to reduce mutual funds' cash obligations
Business
The Securities and Exchange Board of India, or SEBI, is looking to shake up how mutual funds handle their cash after stock market trades.
Right now, funds have to pay the full amount for every purchase, even if they're selling other investments at the same time.
The new proposal? Only settle the difference, so if a fund buys ₹100 crore worth of stocks and sells ₹90 crore in one go, they'd just pay ₹10 crore.
Less cash stuck, less hassle.
Netting confined to mutual fund schemes
This netting system would only work within each individual mutual fund scheme (not across different ones), and it doesn't change how actual shares are delivered; they'll still settle as usual.