How demat MFs will get automated SWP

The Securities and Exchange Board of India (Sebi) has proposed extending the facility of standing instructions for systematic withdrawal plans (SWP) and systematic transfer plans (STP) to mutual fund units held in demat form, a move that could simplify cash flow planning for investors.

- apoorva ajith

In a 5 February consultation paper, Sebi said the change aims to improve ease of doing business and bringing parity between mutual fund units held in statement of account (SoA) form and those held in dematerialized form.

Mint explains what Sebi has proposed and why it matters.

What are the proposals?

Sebi has proposed allowing investors to register standing instructions for SWP and STP even when their mutual fund units are held in demat form. At present, such standing instructions are available only for units held in SoA form, whereas demat investors often have to place a manual redemption request.

The framework will be rolled out in two phases. In the first phase, investors will be able to register unit-based SWP or STP instructions via depositories or stock exchanges. Once registered, these instructions will be executed through stock exchange order-entry platforms.

In the second phase, the processing of SWP and STP instructions will move to MF registrars, allowing more com-

The market regulator said the change is aimed at improving ease of doing business.

plex variants such as amount-based withdrawals, appreciation-based switches, and swing STPs.