The Securities and Exchange Board of India (SEBI) on September 03, 2026, issued a Consultation Paper on a proposal to permit net settlement of funds for transactions undertaken by mutual fund schemes in the cash market.
The following has been stated: -
•SEBI has proposed allowing mutual fund schemes to net fund obligations for outright buy/sell transactions in the cash market, to reduce temporary liquidity requirements and operational inefficiencies, particularly during index rebalancing and large subscriptions/redemptions.
•Netting will be permitted only at the individual scheme level; transactions involving both purchase and sale of the same security in the same settlement cycle will remain excluded and settled gross.
•Securities will continue to be settled on a gross, delivery-backed basis, with STT and stamp duty continuing as applicable, while residual purchase obligations must be funded separately.
•SEBI has invited public comments on the proposal, including whether net settlement should be permitted and the proposed safeguards, by September 24, 2026.
The detailed notification is given in the document below.
