No More Unauthorized Transactions: SEBI Proposed SIM Binding Mechanism

In February 2025, SEBI proposed the SIM binding mechanism in order to prevent unauthorized transactions in Demat or trading accounts. This measure is similar to the UPI safety framework wherein the UPI App identifies the SIM along with the mobile device and bank account details for executing the transactions. In this blog, we’ll dig deeper into this newly proposed SIM binding mechanism and how it can help in strengthening the safety protocols in Demat or trading accounts.

What is SIM Binding Mechanism?

SIM binding mechanism is about the “One UCC-One Device-One SIM” system, which is similar to the UPI apps. In this mechanism, you can log in to the trading account only when the application identifies the UCC along with the registered SIM and mobile device. A UCC (Unique Client Code) is a unique alphanumeric code assigned by stockbrokers to each client or account holder. This code is sent via SMS or email to the client when they register with the broker.

The SIM binding mechanism ensures that the holder can log in to the trading account when the application recognizes the registered SIM and mobile device with UCC. This process ensures that nobody is able to log in to your trading account by taking the OTP or code from you, which helps in preventing unauthorized access or fraudulent activities.

This is different from how you share your OTT account details with your friends or family members to log in to your account. However, in the trading account, investors’ personal or financial details are involved which need to be safeguarded.

How to Link Mobile Device and SIM with UCC?

The stockbrokers have to provide this binding facility wherein investors can register their mobile devices with them. The hard bind mobile device, which covers “SIM – Mobile Device – Enabled UCC,” will be considered as the primary SIM bound device. Here is how you can link your mobile device and SIM with UCC for the first time:

1. Download the trading app and enter your mobile number to start the registration or sign-in process.
2. The application will automatically verify whether the given mobile number is linked to the UCC.
3. For someone having two SIMs in a mobile phone, the stockbrokers should set up a process so that the authentication will take place from the UCC-linked SIM (mobile number).
4. The application will initiate the encrypted code from the mobile number to the stockbroker. The application will decrypt and authenticate the received code, and the primary SIM-bound device will be approved.
5. By following the same process of the SIM binding mechanism, you can choose to register one additional SIM and mobile device with the UCC as the secondary SIM-bound device.

How to Login to a Trading Account on Multiple Devices?

You can log in to your trading account through the registered or primary mobile device without entering the password. This can be initiated through any of three ways: biometric authentication, facial recognition, or mobile pin-based authentication.

In case you are logging in to your trading account from a desktop or laptop, a short time-span encrypted QR code is generated, which you need to scan from your primary or secondary SIM-bound device.

SIM Binding Mechanism: Other Important Points to Know

• If family members or HUF are using a single mobile number or device, then this can be linked to multiple UCCs as well. In the case of family members, a maximum of 6 UCCs can be linked to a single SIM or device.
• In this SIM binding mechanism, you can continue to keep your trading account active or logged in from one channel (desktop application or web-based platform) apart from the primary and secondary SIM-bound devices at any time.
• To keep both the primary and secondary SIM-bound devices active, they need to be kept within a 100-meter area. If the distance increases, the secondary device will be signed out automatically.
• If you lose or change your primary or secondary mobile device, then you need to inform the stockbroker from your registered email address. Trading (Internet-Based Trading/ Securities Trading using Wireless Technology) will be disabled until you complete the in-person verification or virtual verification with the stockbroker. After a new mobile device or SIM is registered with the stockbroker, you can start trading again.
• Stockbrokers will have to keep the details of the log-in attempts of the user on the mobile or web-based devices for the last 7-year period.

How Will the SIM Binding Mechanism Benefit Investors?

The SIM binding mechanism ensures unauthorized access through SIM spoofing (like OTP diversion), and inaccurate transfer of shares will be prevented. This can also help in reducing hacking and identifying fraudulent practices, thereby strengthening investors’ confidence in the trading system.

This proposed framework allows the investors to have greater control over the logged-in sessions on multiple devices and revoke the sessions on any devices. This helps in creating a secured trading environment as the registered mobile device will play a key role in logging the trading account.

Conclusion

The proposed SIM binding mechanism will initially apply to the top 10 qualified stockbrokers, and they have to implement the required systems in the coming 6 months. For smooth transitions for the account holders or traders, it is optional for them to choose this mechanism. In the long run, this framework will be applied in a phased manner and considered a mandatory requirement for accessing trading accounts.

India’s stock market trading and safety mechanism is revolutionizing for the best. You can also kickstart your trading journey in this environment by opening free Demat Account with SMC Global Securities.

References:
https://www.sebi.gov.in/reports-and-statistics/reports/feb-2025/consultation-paper-on-technology-based-measures-to-secure-trading-environment-and-to-prevent-unauthorised-transactions-in-trading-demat-account-of-investors_92015.html

https://nsearchives.nseindia.com/web/sites/default/files/2025-02/PR_cc_21022025_0.pdf

Author: All Content is verified by SMC Global Securities.