SEBI directs depositories to build SWP/STP standing-instruction facility for demat mutual fund units
Depositories must build a standing-instruction SWP/STP facility for demat mutual fund units, with Phase-I live by 31 January 2027
Change
On 17 July 2026 SEBI extended the SWP and STP standing-instruction facility to mutual fund units held in demat form, previously available only for units held with a mutual fund or its RTA. Depositories act as nodal facilitator and must implement unit-based SWP/STP (Phase-I) by 31 January 2027 and amount-based SWP/STP (Phase-II) by 30 April 2027, publishing a joint standard framework by 31 October 2026.
Why it matters
Standing instructions for systematic withdrawal or transfer were not previously available for demat-held mutual fund units; this circular closes that gap. Depositories must jointly publish an operating framework by 31 October 2026, amend bye-laws and rules, and complete system changes, delivering unit-based standing instructions in Phase-I by 31 January 2027 and amount-based standing instructions in Phase-II by 30 April 2027. The circular binds depositories as the nodal facilitator, with RTAs, depository participants and asset management companies required to support the facility. It is issued under Section 11(1) of the SEBI Act and takes effect immediately.
Implications
- — Depositories must jointly publish a standard operating framework for demat SWP/STP standing instructions by 31 October 2026, amend their bye-laws, rules and regulations, and complete the necessary system changes, because SEBI has designated them nodal facilitator with binding phase deadlines and the circular takes effect immediately.
- — RTAs, depository participants and asset management companies must support unit-based standing instructions from 31 January 2027 and amount-based standing instructions from 30 April 2027, because the facility operates across the depository chain and each phase carries a fixed SEBI implementation date.
Who is affected
- — Depositories (nodal facilitators for implementation)
- — RTAs, depository participants and asset management companies supporting the facility
What to watch
- — Joint standard operating framework due on depository websites by 31 October 2026.
- — Phase-I (unit-based SWP/STP) implementation due by 31 January 2027.
- — Phase-II (amount-based SWP/STP) implementation due by 30 April 2027.