On Friday, April 24, the regulator specified that “outright transactions” refer to either a purchase or a sale transaction in a security within a settlement cycle, but not both.
This new framework is set to be implemented by December 31, 2026, requiring custodians and other market participants to adjust their systems accordingly.
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With the updated framework, outright buy or sell transactions can be netted to establish the net fund obligation, aimed at alleviating liquidity demands and enhancing operational efficiency for FPIs.
However, transactions that involve both purchases and sales of the same security within a settlement cycle will still be settled on a gross basis.
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SEBI stated that this decision is a response to industry feedback highlighting elevated funding costs and operational hurdles under the current gross settlement system, especially during events like index rebalancing.
The regulator further noted that the settlement of securities between FPIs and custodians will continue to be conducted on a gross basis, while statutory charges such as Securities Transaction Tax (STT) and stamp duty will remain unchanged.
