SEBI extends SWP, STP standing instruction facility to demat mutual fund holdings
Mumbai, July 17
The Securities and Exchange Board of India on Friday extended the facility of creating standing instructions for Systematic Withdrawal Plan and Systematic Transfer Plan to investors holding mutual fund units in demat form, a facility that was not available earlier.
The move is aimed at facilitating ease of doing business.
SEBI said mutual fund investors can currently avail the facility of SWP by creating standing instructions with the mutual fund or its Registrar and Transfer Agent (RTA) for periodic redemption of a specified number of mutual fund units or a specified amount.
Investors can also use the STP facility by creating standing instructions to transfer their investment from one scheme of a mutual fund to another scheme of the same mutual fund through redemption from one scheme and subscription into another.
"Mutual Fund investors can avail the facility of SWP by creating standing instructions with the Mutual Fund or its RTA for periodic redemption of a specified number of Mutual Fund units or amount," SEBI stated,
However, the market regulator noted that such standing instructions for SWP and STP were not available for mutual fund units held in demat form.
Taking into account representations received from the depositories, recommendations of a working group set up by SEBI and recommendations of SEBI's Secondary Market Advisory Committee, the regulator has decided to extend this facility to mutual fund units held in demat form.
SEBI said the implementation of the facility will be carried out in two phases.
In Phase I, investors will be able to create standing instructions for unit-based SWP and STP, under which a fixed number of mutual fund units will be redeemed at a specified frequency for withdrawal or for purchasing units of another scheme of the same mutual fund.
In Phase II, the facility will be extended to amount-based SWP and STP, where standing instructions can be created for a fixed amount to be paid out at a specified frequency or used to purchase units of another scheme of the same mutual fund.
The regulator has directed depositories to act as the nodal facilitator for implementing the framework. Depositories have been asked to implement Phase I by January 31, 2027, while Phase II is to be implemented by April 30, 2027.
SEBI has also directed depositories to jointly publish a standard framework on their websites to operationalise the facility by October 31, 2026. They have also been asked to make necessary amendments to their bye-laws, rules and regulations, carry out required system changes and disseminate the provisions of the circular on their websites.
According to SEBI, the provisions of the circular will come into force with immediate effect. The regulator said the circular has been issued to protect the interests of investors in securities and to promote the development and regulation of the securities market.
— ANI
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