The regulatory update permits netting within individual mutual fund schemes starting on April 1, 2027. Under these rules, qualifying transactions in a security must exclusively consist of either buy orders or sell orders rather than both directions combined. Furthermore, fund houses cannot offset cash market trades across separate schemes under their management. This move extends mechanisms that the regulator previously made available to foreign portfolio investors.
Key points
Mutual funds cannot utilize net settlement across different schemes managed by the same a…: Mutual funds cannot utilize net settlement across different schemes managed by the same asset management entity.
Each mutual fund scheme is required to maintain separate settlements under the newly issu…: Each mutual fund scheme is required to maintain separate settlements under the newly issued guidelines.
Mixed-direction trades involving both purchases and sales of the same security are exclud…: Mixed-direction trades involving both purchases and sales of the same security are excluded from the netting framework.
Sources checked by our analysis pipeline: 1
The move extends to mutual funds a facility that the Securities and Exchange Board of India (SEBI) had already permitted for foreign portfolio investors earlier this year.
Here are the key details:
SEBI said the transactions eligible for net settlement have to be either a sale or purchase in a security, not both
Net settlement, also called netting, would not be allowed across different schemes of the same fund
The regulator said that netting will be allowed in mutual fund schemes from April 1, 2027
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