SEBI proposes mandatory SIM-binding for trading accounts to curb unauthorised transactions

Market regulator Securities and Exchange Board of India (SEBI) on Wednesday proposed a series of technology-driven measures to enhance the security of trading and demat accounts amid rising concerns over unauthorised transactions.

According to a newly released consultation paper, SEBI has outlined a framework that would mandate stock brokers to implement a One UCC-One Device-One SIM authentication mechanism similar to the Unified Payments Interface (UPI) system.

Investors will need to register a mobile device, with its IMEI number and SIM to their trading account. Any login attempt will require biometric authentication or PIN verification.

Access from desktops or additional mobile devices will require QR code-based, proximity-sensitive authentication similar to WhatsApp's login methods.

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Investors will also be able to temporarily disable their accounts to prevent unauthorised trading, a feature similar to online banking security mechanisms.

Orders placed via call and trade services must originate from a pre-registered phone number, and authentication will be conducted through an OTP-based mechanism. Investors will have the option to authorise family-linked UCCs under a single mobile number, subject to formal consent and broker verification.

To prevent erroneous or fraudulent transfers, investors will be required to confirm demat account details twice before executing off-market trades.

The move comes as financial markets increasingly shift towards digital platforms, making them susceptible to cyber fraud and identity theft.

"Due to innovative technological tools, the instances of gaining unauthorised access to trading accounts, SIM spoofing (to divert OTPs), unauthorised account modifications, erroneous transfer of shares etc., are coming to the notice of the regulator in the recent past," the regulator said.

It added, "Due to lack of adequate technology-based controls, the web-based and/or mobile-based trading platforms are prone to hacking, identity theft and frauds etc."

Initially, SEBI will mandate the top 10 qualified stock brokers to implement the proposed security measures within six months. For investors, the enhanced authentication mechanism will initially remain optional, gradually becoming mandatory over time.