SEBI, by way of a Circular dated April 24, 2026, has introduced a framework permitting net settlement of funds for outright transactions undertaken by FPIs in the cash market. Currently, all transactions carried out by FPIs are required to be settled on a gross basis at the custodians’ level, but are settled by the custodian with a clearing corporation on a net basis. SEBI has noted that this gross settlement results in additional liquidity requirements, increased funding costs due to forex slippage and operational inefficiency for FPIs, particularly during days of index rebalancing. Under the new framework, FPI transactions in securities involving only outright sell or outright purchase will be net settled to arrive at a net fund obligation, while transactions in securities having both purchase and sale in a settlement cycle will continue to be settled on a gross basis. The settlement of securities will continue to be carried out on a gross basis between the FPI and the custodian, and securities transaction tax and stamp duty will continue to be charged on a delivery basis. The implementation standards will be formulated by the Custodians and Designated Depository Participants Standards Setting Forum, after consulting relevant stakeholders. The provisions of this Circular will be implemented on or before December 31, 2026.