SEBI Plans Simpler FPI Rules And Intermediary Changes To Improve Market Efficiency

SEBI’s board met on 23 March 2026 to review how it can simplify foreign portfolio investor (FPI) settlement norms and improve intermediary regulations to attract foreign capital.

The proposed reforms come at a time when foreign investors have been pulling money out of Indian equities. As of 22 March, FPIs had sold Indian equities worth ₹88,180 crore in the month. The high selling has prompted policymakers to focus on improving ease of doing business in capital markets.

Change In The Funds Settlement Process For FPIs

One of the key proposals under consideration is allowing “net settlement” or the “netting of funds” for FPIs.

Currently, foreign investors need to settle each trade individually, even when they have matching buy and sell transactions on the same day. As per the proposed change, they will be able to adjust their purchases against same-day sales and just pay the net amount.

This can lower their pressure of funding transactions, reduce costs, and make the use of capital more efficient, in alignment with global markets.

As per reports, the new settlement process may become effective 31 December 2026.

What Else Is Being Considered?

SEBI is also reviewing a few governance and regulatory changes.

It plans to simplify the “fit and proper” rules for market intermediaries to make them clearer and fairer. For example, it may remove the rule that treats the start of winding-up proceedings as a disqualification, and instead consider only final orders.

The regulator also wants to clearly include the right to a hearing in its rules, to avoid any confusion. Along with this, SEBI will look at proposals to improve ease of doing business for real estate investment trusts (REITs) and infrastructure investment trusts (InvITs).

Another important update is regarding IPO documents. Companies will now have to prepare a short and simplified version of the prospectus and share it along with the offer document, so investors can quickly understand the issue.

To become more, instead of attaching a physical prospectus with application forms, they can provide QR codes and links so investors can easily access all important documents online. This is also expected to make the IPO process faster and more convenient.

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What Lies Ahead?

While many reforms and proposals have been discussed, further clarity will come once detailed guidelines are announced via an official circular. But with rising foreign outflows, these reforms are expected to play a crucial role in attracting FPI capital back into the Indian market.

Sources:

ET

TOI

Moneycontrol