SEBI permits net fund settlement at scheme level for mutual fund trades from April 2027, while retaining gross securities settlement.
Net Fund Settlement for Mutual Funds
SEBI has notified a shift to net fund settlement for mutual fund cash market transactions effective 1 April 2027. The settlement will occur at the scheme level, improving capital efficiency.
Gross settlement of securities remains unchanged. The reform targets operational efficiency and reduces liquidity pressures during peak transaction periods. Fund houses must upgrade back-end systems and reconcile with depositories.
This change will reduce transaction costs and streamline settlement cycles. Legal and compliance teams should assess implications for redemption timelines and settlement risk exposures under the new framework.
Citations
- SEBI Circular on Net Fund Settlement, 2026