A key item on the agenda is the proposal to allow foreign portfolio investors (FPIs) net funds for same-day cash market trades, instead of settling each trade individually.
Under the existing framework, FPIs are required to settle equity cash market trades on an aggregate basis, funding each buy transaction independently of any sell transactions on the same day.
Sebi has proposed to allow “netting of funds”, which would allow FPIs to use proceeds from same-day sales to offset purchase obligations, thereby requiring them to meet only net payables.
The move is aimed at increasing operational efficiency and reducing funding costs for them, especially on index rebalancing days. Also, it is expected to reduce forex-related costs caused by the time mismatch between inflows and outflows.
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The proposal follows concerns that the current gross settlement system imposes additional funding requirements on FPIs for at least one extra day, thereby increasing transaction costs.
This will be the fifth board meeting chaired by Sebi Chairman Tuhin Kanta Pandey since he assumed charge on March 1, 2025.
In addition to FPI-related reforms, the Board will review a range of governance and regulatory proposals. This includes a comprehensive overhaul of the “fit and proper person” criteria for market intermediaries, to enhance procedural clarity and fairness, people familiar with the matter said.
Under this, SEBI is considering a proposal to remove the reference to initiation of winding-up proceedings as a disqualification to ensure that only the final winding-up order, and not just the initiation of proceedings, is taken into account while assessing whether a person is fit and proper.
Also, the regulator wants to clearly include the right to be heard in the regulations. Although the practice of giving a fair opportunity of hearing already exists, it is proposed to be clearly stated in the rules to remove any procedural ambiguity.
The Board will also take up ease-of-doing business proposals related to Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs).
Another important agenda item is the consideration of the report submitted by the High-Level Panel on Conflict of Interest and Transparency, they added.
The regulator will discuss the panel’s report, which proposes sweeping reforms to bring transparency through greater disclosure and a “zero-tolerance” culture to address conflicts of interest among Sebi’s top executives.
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