SEBI has introduced the facility of SWP and STP for mutual fund units held in demat form. This facility was not available earlier. The move aims to make business easier for investors, which will be implemented in two phases.
Mumbai (Maharashtra) [भारत]July 17 (ANI): The Securities and Exchange Board of India (SEBI) on Friday extended the facility to make standing instructions for Systematic Withdrawal Plan (SWP) and Systematic Transfer Plan (STP) for investors holding mutual fund units in demat form. This facility was not available earlier. The aim of this step is to bring ease of doing business.
SEBI said mutual fund investors can currently avail the SWP facility by placing a standing instruction with the mutual fund or its Registrar and Transfer Agent (RTA) for periodic redemption of a certain number of mutual fund units or a certain amount.
Investors can also use the STP facility by creating a standing instruction to transfer investments from one scheme of a mutual fund to another scheme of the same mutual fund. This happens through withdrawal from one scheme and investment in another.
“Mutual fund investors can avail the facility of SWP by placing a standing instruction with the mutual fund or its RTA for periodic withdrawal of a certain number of mutual fund units or amount,” SEBI said.
However, the market regulator also pointed out that such standing instructions for SWP and STP were not available for mutual fund units held in demat form.
Taking into account the memorandums received from depositories, the recommendations of a working group constituted by SEBI and the recommendations of the Secondary Market Advisory Committee of SEBI, the regulator has decided to extend this facility to mutual fund units held in demat form.
The facility will be implemented in two phases
SEBI said the implementation of this facility will be done in two phases.
In the first phase, investors will be able to make standing instructions for unit-based SWP and STP. Under this, a certain number of mutual fund units will be redeemed at a fixed frequency for withdrawal or to purchase units of another scheme of the same mutual fund.
In the second phase, this facility will be extended to amount-based SWP and STP, where standing instructions can be made to pay a fixed amount at a fixed frequency or to purchase units of another scheme of the same mutual fund.
Role and time limit of depository
The regulator has directed the depositories to act as nodal facility providers to implement this framework. Depositories have been asked to implement the first phase by January 31, 2027, and the second phase by April 30, 2027.
SEBI has also directed depositories to jointly publish a standard framework on their websites for rolling out this facility by October 31, 2026. They have also been asked to make necessary amendments in their bye-laws, rules and regulations, make necessary system changes and disseminate the provisions of the circular on their websites.
According to SEBI, the provisions of this circular will come into effect with immediate effect.
The regulator said this circular has been issued to protect the interests of investors in securities and to promote the development and regulation of the securities market. (ANI)
(Except for the headline, this story has not been edited by Asianetnews Editorial staff and is published from a syndicated feed.)