Sebi Allows SWP, STP Standing Instructions for Mutual Fund Units Held in Demat Form

New Delhi: Markets regulator Sebi on Friday allowed investors holding mutual fund units in demat form to create standing instructions for Systematic Withdrawal Plans (SWPs) and Systematic Transfer Plans (STPs), a move aimed at improving investor convenience and ease of doing business.

At present, investors can create standing instructions for SWPs and STPs only for mutual fund units held in statement of account (SOA) form through asset management companies (AMCs) or their registrar and transfer agents (RTAs). However, this facility is not available for units held in demat accounts.

“It has been decided to extend the facility of creating standing instructions for SWP/STP mandates for the mutual fund units held in demat form, to facilitate ease of doing business,” Sebi said in its circular.

The decision followed consideration of representations from depositories and recommendations from a Sebi-constituted working group and the Secondary Market Advisory Committee.

The framework will be implemented in two phases. In the first phase, investors will be able to create standing instructions for unit-based SWPs and STPs, allowing redemption of a fixed number of mutual fund units at a specified frequency for withdrawals or for transferring investments to another scheme of the same mutual fund.

In the second phase, the facility will be extended to amount-based SWPs and STPs, enabling investors to redeem or transfer a fixed amount at periodic intervals.

Depositories have been designated as the nodal facilitators for implementing the framework.

Sebi has directed depositories to roll out the unit-based SWP/STP facility by January 31, 2027, while the amount-based facility will be implemented by April 30, 2027.

Additionally, depositories have been asked to jointly publish a standard operational framework on their websites by October 31, 2026.

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