SEBI said that this process usually takes about 150 days. Therefore, to enhance investor convenience and reduce time and risk, it has been decided to eliminate the need for issuing LOC.
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Market regulator SEBI has simplified the process of depositing securities into demat accounts, significantly facilitating investors. This significant change eliminates the need for a transaction confirmation letter. This move will reduce the transfer period from 150 days to just 30 days.
SEBI issues circular regarding new regulations
The Securities and Exchange Board of India (SEBI) stated in a circular issued on Friday that currently, listed companies, issue registrars, and share transfer agents (RTAs) issue letters of confirmation (LoCs) to investors, which are then submitted to depository participants for depositing securities.
RTAs and listed companies will deposit securities directly into demat accounts after due diligence.
SEBI stated that this process typically takes approximately 150 days. Therefore, to enhance investor convenience and reduce time and risk, it has been decided to eliminate the need for issuing LOCs. Under the new system, RTAs and listed companies will deposit securities directly into investors’ demat accounts after conducting due diligence. SEBI stated that this change is expected to reduce the timeframe for depositing securities from 150 days to 30 days and eliminate the risk of loss or misuse of LOCs.
New rule to take effect April 2, 2026
The Securities and Exchange Board of India stated that the new rule for depositing securities into demat accounts will come into effect April 2, 2026. Any LOCs issued before this date can be used to deposit securities into demat accounts within the stipulated timeframe. Market regulator Sebi said the initiative aims to simplify investing in the market, enhance operational efficiency and strengthen investor protection.
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