SEBI Proposes SWP/STP Standing Instructions for Demat MF Units

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  • Last Updated on 8 February, 2026

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SEBI SWP STP standing instruction

Consultation Paper Dated 05.02.2026

The Securities and Exchange Board of India (SEBI) has issued a consultation paper proposing to extend the standing instruction facility for Systematic Withdrawal Plan (SWP) and Systematic Transfer Plan (STP) to mutual fund units held in demat form.

1. Existing Framework and Issue Identified

At present:

  • The standing instruction facility for SWP/STP is available only for mutual fund units held in Statement of Account (SOA) mode.
  • Investors holding mutual fund units in demat form are required to provide separate instructions for each SWP or STP transaction.

SEBI has noted that this differential treatment:

  • Creates operational inconvenience for investors
  • Increases compliance and processing effort for intermediaries
  • Leads to inconsistency in processes across holding modes

2. Objective of the Proposal

The proposal seeks to:

  • Align the process for mutual fund units held in demat form with those held in SOA mode
  • Facilitate ease of doing business for investors and market participants
  • Improve operational efficiency and standardisation in mutual fund transactions

3. Proposed Extension of Standing Instruction Facility

Under the proposed framework:

  • Investors holding mutual fund units in demat form would be allowed to provide standing instructions for SWP and STP
  • Once registered, such instructions would enable automatic execution of transactions without the need for repeated authorisations

4. Phased Implementation Approach

SEBI has further proposed that:

  • The regulatory framework for standing instructions for SWP/STP mandates for demat-held mutual fund units be implemented in two phases
  • A phased rollout would help address operational, system, and coordination challenges among market intermediaries

5. Invitation for Public Comments

In view of the implications for:

  • Investors
  • Mutual funds
  • Depositories
  • Stock exchanges and other intermediaries

SEBI has invited public comments and suggestions on the proposals outlined in the consultation paper.

6. Timeline for Submission of Comments

  • Last date to submit comments – 26 February 2026

Stakeholders are encouraged to provide their feedback within the stipulated timeline to assist SEBI in finalising the framework.

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Author: Taxmann

Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.

The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:

  • The statutory material is obtained only from the authorized and reliable sources
  • All the latest developments in the judicial and legislative fields are covered
  • Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
  • Every content published by Taxmann is complete, accurate and lucid
  • All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
  • The golden rules of grammar, style and consistency are thoroughly followed
  • Font and size that's easy to read and remain consistent across all imprint and digital publications are applied