New Sebi norms to improve FPI, bond investors' liquidity

MUMBAI: Sebi has taken two separate measures to improve liquidity for foreign portfolio and retail bond investors. FPIs will see improved liquidity through quicker settlement of funds following the sale of securities, while retail bond investors can sell their bonds back to issuers at pre-determined dates.

For FPIs, a new system has been introduced where tax consultants will provide the required certificates by 9:00 am on the day following the trade, allowing funds to be released hours later. Previously, FPIs reported delays in accessing sale proceeds beyond the standard 'T+1' settlement date, which happened primarily due to the previous process of obtaining tax clearance on their net sale proceeds to ensure compliance with FEMA regulations.

"Under the new system, in place since Sept 9, 2024, tax certificates for FPI sale trades executed on 'T' day are issued by tax consultants by 9:00 am IST on 'T+1' day. This allows FPIs to access sale proceeds, either for repatriation or for reinvestment, on the same 'T+1' day," Sebi said in a statement. The markets regulator estimates that efficiency gains from these revised processes would be around Rs 2,000 crore per annum.

Retail investors in bonds that are listed on the stock market can look forward to bonds with assured buy-back from issuers through put options on specified dates, with Sebi introducing a liquidity window facility for them.


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